Don’t fall for these five common bankruptcy myths

It’s not easy to deal with debt. It can feel like it’s crushing you, rendering it hard to make ends meet and seeping the joy out of your life as it consumes your thoughts and robs you of sleep. As daunting as that can be, you don’t have to let your debt woes control your life. You can take control of the situation by considering your debt relief options, which may include seeking personal bankruptcy.

But if you’re like a lot of Wisconsin residents, then you’re probably worried about all the negative information that you’ve heard about personal bankruptcy. The fact of the matter, though, is that a lot of that information is simply false. In the remainder of this post, we want to look at some common bankruptcy myths so that you have a better understanding of what the process can do for you.

There’s a lot of misinformation out there about bankruptcy. Here are some of the most common myths that, sadly, deter a lot of people from seeking the relief that they need:

1. Bankruptcy will leave you with nothing: Sure, if you pursue a Chapter 7 bankruptcy petition, then you may have to sell some of your assets to pay back your creditors as much as you can. And that can be painful. But there are bankruptcy exemptions that you can utilize to ensure that you still have financial stability once your bankruptcy is finalized. For example, you can keep up to $75,000 in home equity and $12,000 in personal property. Those are just two of the many exemptions that you can use, and they certainly aren’t nothing. Therefore, you can have financial stability post-bankruptcy.
2. You’ll still be harassed by creditors: If you’re successful on your bankruptcy petition, then your outstanding debts will likely be discharged. And during the time that your petition is being processed, creditors are prohibited from hounding you. So, bankruptcy can spare you from the shameful collection tactics oftentimes deployed by creditors.
3. Bankruptcy is a sign of failure: A lot of people file for bankruptcy. In fact, tens of thousands of bankruptcy petitions are filed each year. Although some of these petitions are the result of financial mismanagement, many of them are spurred by unexpected expenses, medical costs, and employment challenges. The system exists to provide second chances. You should take advantage of that if you can.
4. You can only file for bankruptcy one time: You might find it hard to believe, but there’s no limit on the number of times that you can file for bankruptcy. So, if you’ve fallen on tough times due to unexpected circumstances, you always have the bankruptcy process to consider as a debt relief option.
5. Bankruptcy will ruin your credit forever: It’s true that your credit score will take a hit after filing for bankruptcy. But this isn’t a permanent mar. You can diligently work to rebuild your credit by using a secured credit card, finding cosigners for loans, obtaining and maintaining stable employment and staying up-to-date on all bill payments.

The bankruptcy process is meant to provide you with protection and a second chance when you fall on hard economic times. In other words, it’s there to help you in your time of need. Don’t let common misconceptions about the process drive you away. If you do, then you’ll force yourself to continue to fight to find a way out of your debt spiral, which may do nothing other than pile more stress and uncertainty on you. Now is the time to shed that burden and act to secure the relief you need.