Bankruptcy is an emotionally charged and complex issue. As a result, there are many misunderstandings surrounding it. While a qualified Utah bankruptcy attorney is the best person to advise you on your particular situation, there are some myths that we can clear up right away.
Myth #1: I’ll lose my job if declare bankruptcy. Generally you cannot legally be fired for declaring bankruptcy, so it shouldn’t have any bearing on your job security.
Myth #2: I can’t get a new job if I declare bankruptcy. Along with background checks, employers will often do pre-employment credit checks. If a potential employer brings up the bankruptcy, be honest about it. Share some of the circumstances surrounding it and the lessons you’ve learned. Most potential employers would rather see a bankruptcy on your credit than a mountain of debt you can’t possibly repay.
Myth #3: Bankruptcy will destroy my credit. If you’re declaring bankruptcy, your credit is most likely already shot and completely maxed out. Yes, bankruptcy will go on your credit, but the damage has already been done and the bankruptcy will start the process of repairing it.
Myth #4: Declaring bankruptcy is dishonest. Many hard-working, honest people experience some form of financial hardship that renders them unable to meet their financial obligations. It happens, and the founders of our country knew it would; that’s why it’s in the constitution. Bankruptcy is a legal method of discharging or reorganizing debts. Regardless of what they may say or how they may make you feel, creditors know this. When they entered into the credit contract, they assumed the risk that they might not get repaid on time or in full.
Myth #5: Declaring bankruptcy will eliminate all of my debt. Filing a chapter 7 bankruptcy allows for many types of debts to be discharged. Chapter 13 bankruptcy involves a reorganization of debt and a repayment plan. Debts that cannot be eliminated through bankruptcy include some taxes, alimony, child support payments, and most student loans.
Myth #6: My spouse and I have to declare bankruptcy together. Talk to your Utah bankruptcy attorney to see what’s the best option for you. Married couples do not necessarily have to apply for bankruptcy together. In the majority of cases, it does make sense for both partners to file, and doing it jointly can save money in court and attorney fees.
Myth #7: I’ll lose everything when I file for bankruptcy. Generally, bankruptcy does not wipe out liens. That means that if you have a house, vehicle, or other property that is collateral for its loan, in most cases you can continue to make those payments and keep the property.
Myth #8: Declaring bankruptcy is difficult. This absolutely could not be further from the truth. Choosing an attorney in Utah who specializes in bankruptcy law will make the process move along easily for you. Making the decision to file for bankruptcy is the hard part. Once that’s done, your Utah bankruptcy attorney will coach you through the rest.