Myths and Misconceptions About Bankruptcy

There are many myths and misconceptions about bankruptcy. Unfortunately, these misunderstandings can even prevent people from filing for bankruptcy when in reality, it would have been their best option. The attorneys at Maselli Warren have been handling bankruptcy cases for decades. They know the process thoroughly, and will share their knowledge with you to make sure that as a client, you’re well-informed. Don’t let incorrect information hold you back from making the right choice about your financial future — get the real facts about bankruptcy. Give us a call at (800) 891-2657 to arrange for a consultation, or contact us online. When you want to talk about bankruptcy, we’ll be there.

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Common Bankruptcy Myths & Misconceptions

Bankruptcy is Only for Irresponsible People

One of the most persistent stereotypes about bankruptcy is the notion that bankruptcy is only for irresponsible millionaires who recklessly spend themselves into ruin. But while Mike Tyson, Willie Nelson and others may be associated with bankruptcy due to their fame, in reality, the vast majority of people considering bankruptcy are not celebrities who live extravagant lifestyles. Most people who look into bankruptcy are hard-working and responsible, but have been financially devastated by the loss of a job, divorce proceedings, or a large medical expense. The stigma of carelessness that plagues bankruptcy is ironic, because in fact, filing for bankruptcy is one of the most responsible and proactive courses of action you can take when finances become strained beyond their limits. Between March of 2011 and 2012, over a million Americans filed for bankruptcy — you aren’t alone.

My Credit Will Be Ruined Forever

Some people are scared away from bankruptcy by the stubborn idea that their credit will be hopelessly destroyed for the rest of their lives. While it’s true that there are credit ramifications to a bankruptcy — the filing will typically stay on an individual’s financial record for 10 years — they are neither permanent nor irreversible. In fact, declaring bankruptcy is the first step to getting your credit back on track. Bankruptcy gives people a chance to wipe the slate clean and get a fresh start on level ground, rather than trying to claw their way out of a hole for years before they can so much as break even. Once you file for bankruptcy, it generally only takes a few years of timely bill payments to restore your credit to full health. Many people find that their credit actually improves post-bankruptcy, and making a future purchase of a home or vehicles is entirely possible.

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My Bankruptcy Will Ruin My Child or Spouse’s Life

For people who are married or have children, the fear that their bankruptcy will be a burden upon their loved ones can be a powerful deterrent from filing. Fortunately, you can rest easy knowing that your bankruptcy will have minimal effects on their futures. Where a spouse is concerned, you can simply file on your own. Their credit score will not be damaged, nor will their personal financial record note the bankruptcy. (There is a possibility that, should you apply for loans together in the future, your damaged credit may result in higher fees to obtain those loans.) Where children are concerned, they will still be eligible for student aid during the college years from virtually all of the normal channels, with the exception of Federal PLUS loans.

I Can’t Afford to File for Bankruptcy

Many people think, “I’m in enough money trouble as it is, I can’t afford to hire an attorney and spend even more to declare a bankruptcy.” This might sound logical, but it’s a matter of long-term versus short-term. Yes, there are attorney fees and filing fees, and yes, fees are the last thing anyone wants to deal with if they’re in a financial place where they’re considering bankruptcy. But those fees are a drop in the bucket compared to the havoc unchecked debt can wreak on your life. Spending a few hundred dollars to file now is much better than your home being foreclosed on later. At Maselli Warren, we understand that our bankruptcy clients are struggling. We will work with you to provide the most efficient and cost-effective plan possible.

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A Bankruptcy Will Only Make Matters More Complicated

Unless you have filed in the past, bankruptcy is an unfamiliar process, and as with anything that is unfamiliar, there tends to be trepidation about what it is going to entail. People tend to imagine years of court hearings, paperwork whose language they don’t understand, and having to sweat in front of steely juries waiting to pounce on a technicality. But in reality, bankruptcy does not have to be overwhelming, confusing, or scary. Our experienced and compassionate attorneys will guide and advise you through the process, from step one all the way to discharge. Filing for bankruptcy now can avoid a host of future problems that are truly overwhelming — problems like foreclosure, eviction, wage garnishment, account freezes, vehicle repossessions, and more.

Don’t let your financial situation snowball out of control. Filing for bankruptcy might seem intimidating, but millions of Americans just like you have been through it before. We have been through it before. Let us share your burden and navigate your path to financial freedom. Contact us today.