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Persistent bankruptcy myths do not hold up under scrutiny

It may be surprising to know that more than half of U.S. families have less than $1,000 in savings. Those figures are from a national survey and likely apply to many Florida residents as well. It is a fact that the middle class and middle-lower economic classes live mostly on a shoestring budget; a substantial unexpected debt could put the family in financial turmoil. As that situation progresses, one can look for an increase in bankruptcy filings in the future as people turn to the only true remedy available for a fresh start and a clean slate.

There are a number of myths, however, that tend to make consumers shy away from what appears to be an ominous choice. These myths further a negative stigma about bankruptcy, but they do not hold up under scrutiny. The best way for an individual or married couple to find out about the reality of debt relief remedies is to take advantage of a free consultation with an experienced consumer bankruptcy attorney.

One daunting myth about bankruptcy is that the individual or married couple will never get credit again, or that it will take over 10 years to get out from under the shadow of a completed bankruptcy. Those myths are untrue. Consumer studies and government reports largely debunk the powerful myth that says that a consumer cannot get credit again after a bankruptcy. Bankruptcy filers got substantially more new lines of credit than others who had not filed but who remained bogged down in insolvency.

There are also surprising indications that those who complete a bankruptcy tend to get a significant spike upward in their credit score after the discharge. In addition, those who file for a personal bankruptcy will preserve, pursuant to Florida and federal law, their retirement funds. Those who try to contend outside of a bankruptcy filing often deplete those funds to try and engage in various payment plans and unworkable programs.

Source: khou.com, "Confessions of a bankruptcy attorney: What people get wrong about bankruptcy", Jeanette Kazmierczak, March 24, 2017

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