When it comes to consumer bankruptcy, there is a considerable amount of confusion among Americans as to what is true and what is false. Bankruptcy myths and rumors spread around the internet like wildfire, and many of these misconceptions need to be debunked and addressed. Here is a look at some of the most common Texas bankruptcy myths around.
All Bankruptcy is Related to Recklessness
This is probably the most common misconception regarding consumers filing for bankruptcy. While financial carelessness and uncontrolled spending habits can lead to bankruptcy, there are many more possible causes. Losing a job, suffering a medical illness, and going through a divorce can all be major factors.
It’s Impossible to Build Back Credit
Contrary to popular belief, after filing for bankruptcy, it is quite possible to build credit again. Oftentimes people will have to use secured credit cards for a length of time, but responsible and regular payments can eventually improve a damaged credit score. It is simply a bankruptcy myth that credit is permanently ruined after filing for bankruptcy.
Bankruptcy Solves Everything
A common bankruptcy myth is that bankruptcy can solve all financial debts. While bankruptcy law exists to help people escape bad situations, it is not a cure-all. Filing for bankruptcy can dissolve a lot of past debts, but some debts will survive. Child support, alimony, student loans (without a hardship), and tax debts (without properly filed tax returns) are not discharged by bankruptcy.
By researching bankruptcy myths and truths, consumers can become more aware of what bankruptcy really means. Filing for bankruptcy can have huge benefits for those in certain situations, but it is always important to understand what those benefits are and are not.