Experienced Guidance Navigating Bankruptcy And Divorce

Experienced Guidance Navigating Bankruptcy And Divorce

Bankruptcy Myths Versus Reality

On Behalf of | Aug 24, 2023 | Bankruptcy

You may find yourself overwhelmed by debts for any number of reasons. Financial hardships occur frequently across all segments of Indiana society. Do not let preconceived ideas about bankruptcy keep you from exploring how it could reset your life. People spread bankruptcy myths in day-to-day conversations without knowing it. In reality, filing for bankruptcy produces mostly positive results for people.

Not all debts qualify for discharge

An appealing myth that you may have heard about bankruptcy promotes the idea that filing erases all debts and gives you a total fresh start. A court cannot discharge some forms of debt, such as student loans and unpaid child support. The bankruptcy system will not forgive certain tax debts either. On the other hand, Chapter 7 bankruptcy often succeeds in releasing you from payment for medical bills, credit cards and sometimes secured debts as well.

Spouses do not both have to file

If your debt is in your name only, then your spouse may not have to file alongside you. This arrangement could spare the bankruptcy from going on both of your credit reports.

Debts held jointly by both spouses, however, create a situation where both spouses would file for bankruptcy. The legal action to discharge the debts has to involve both names on the original loan.

Your credit rating can recover

A bankruptcy will not follow you around for the rest of your life and keep you permanently from getting a loan. Credit bureaus will show the bankruptcy on your report and credit score for seven to 10 years. During this time, you absolutely can rebuild your credit. You could see your credit score rise by over 80 points in the year following the completion of your bankruptcy.