Myths About Declaring Bankruptcy

ChecklistIf you have talked to anyone about the possibility of bankruptcy, no doubt you have heard as many differing opinions as people you have talked to. Do not listen to the various bankruptcy myths that only cause confusion and anxiety. Talk with an experienced lawyer who can help you understand the truth and find the debt relief you need.

At The Law Offices of Ronald I. Chorches, based in Hartford, Connecticut, we bring decades of experience and knowledge to every case we handle. Attorney Ronald I. Chorches and our entire team are committed to helping you understand your options and make smart choices for your financial future.

1. Declaring Bankruptcy Is A Personal Failure

This is simply not true. Not only have many successful people filed for bankruptcy, but bankruptcy is rarely the personal fault of the person filing. More often, the substantial debt that causes people to file for bankruptcy comes from sudden medical emergencies, inadvertent job losses or the simple fact of rising costs in a struggling economy.

Chapter 7 and Chapter 13 bankruptcy are useful if you need to find a fresh financial start, and we are here to help you.

2. Bankruptcy Will Ruin My Credit

The reality is that, in most cases, bankruptcy helps people improve their credit scores in the long term. Although your credit score could result in a credit score dip at first, bankruptcy will put you in a position to be clear of excessive debt, where you can begin rebuilding your credit.

We often see former clients receiving new car loans within a year after receiving bankruptcy relief, and FHA home mortgages after only two years. Even credit cards will become available.

Although creditors will never advertise or tell about how bankruptcy can free you from debt and allow you to repair your credit, we know that this is true. Talk with a lawyer to discuss your options.

3. Everyone Will Know I Declared Bankruptcy

Although finalized bankruptcies can become public knowledge, there is no risk in considering your options. Attorney Ronald I. Chorches and our entire team take our clients’ confidentiality seriously. For most of our clients who go through bankruptcy, it is worth it. And it is important to note that we do not simply lead every client into bankruptcy proceedings. We will explore every option for your debt relief, and we will only recommend bankruptcy if we are confident that this is the best approach for you.

Many people in Connecticut find themselves struggling with extensive amounts of debt due to job loss, divorce, medical problems or a variety of other situations. Although many people can benefit from the consumer bankruptcy process, many avoid taking the steps necessary to file because they have heard false information about what bankruptcy entails. Here are some of the most common myths surrounding consumer bankruptcy and why they are not true.

4. Bankruptcy Eliminates All Debts

Bankruptcy is designed to help people in debt start over financially. However, several types of debt are not discharged during this process. For example, restitution owed because of a crime and domestic support obligations, like alimony and child support, cannot be eliminated when bankruptcy is filed.

It is also important to remember that spending without abandon before the bankruptcy filing process does not mean that these debts will be discharged. In many cases, this is viewed as a form of fraud, and courts generally do not discharge debts that are incurred due to fraudulent activities.

5. Only The Financially Irresponsible File Bankruptcy

A common stigma exists that makes it seem like only those who cannot manage their money need to file for bankruptcy. However, filing bankruptcy is far from a personal failing, and many people end up needing to file bankruptcy because of medical debt and other unfortunate circumstances. People should view bankruptcy as a tool to get back on track financially rather than a sign of personal failure.

6. Bankruptcy Will Permanently Ruin My Credit

Those who file bankruptcy should expect to pay higher interest rates and have limited access to lines of credit for as long as bankruptcy remains on their credit report, which is usually seven to 10 years. Although there are repercussions that come with filing, those who go through the bankruptcy process may find that their credit score starts to improve shortly after they finish filing.

7. Paying Off Debt Is Always The Best Option

Some believe that paying off debts in full is always better than moving forward with the bankruptcy process. However, bankruptcy is often the better option for those who have debts that take up more than half of their annual income and they cannot pay off within a five-year period.

Get In Touch With Us

If you are considering bankruptcy wee invite you to get in touch with us with any of your questions, or set up an appointment to meet with us in a professional, confidential setting. Call us at 860-952-3878 or email us to schedule your free initial consultation.