There are many common myths we hear about bankruptcy here at Morgan & Partners Inc. Here are some of the ones we hear most frequently, as well as some information about why they aren’t true.
1. Only the financially irresponsible file for bankruptcy. While this may be true for some, in the majority of cases, inopportune life situations create the need to file bankruptcy. Many of those who turn to us have dealt with a chronic illness, divorce, job loss, or another financially devastating situation.
2. All debts can be eliminated through bankruptcy. Bankruptcy can provide a fresh financial start, but this does not necessarily mean the process discharges all prior debts. For instance, you generally cannot eliminate restitution owed because of a crime or past-due child support or alimony payments during bankruptcy.
3. Bankruptcy has a permanent impact on your credit. It may surprise you how quickly you begin receiving credit card offers in the mail again after you receive a discharge from bankruptcy. We suggest using a secured credit card for a few months before switching to a traditional one in the months immediately following the filing to repair your credit.
4. Spending without abandon before bankruptcy is beneficial. Many people assume that before they file bankruptcy, they can spend without abandon and these debts will be formally discharged later on. However, this can be considered fraud, and you will likely end up having to pay that money back.