There are a lot of myths and pieces of misinformation surrounding bankruptcy, whether simple misunderstandings or deliberately misleading bits of data put out into the world by unscrupulous people. It’s important to know and understand these bankruptcy myths before even considering the massive undertaking that bankruptcy filing can entail.
First of all, those people who file for bankruptcy are not simply financially irresponsible. Many factors can lead to the decision to file for bankruptcy and not all of them are simply the fault of the person filing. A variety of problems and complications can arise, especially in the world of small business, which can lead to a filing. A bankruptcy filing doesn’t mean that there is a guilty party or a financial failure at the reins.
Another bankruptcy myth is that filing will dispel all past debts. Actually, bankruptcy only applies for the set terms of the filing, not for the entirety of your spending history. Knowing what is and isn’t fair game, both in terms of claims, as well as what assets you could lose in a liquidation process, is an important piece of research to do if you are planning to file.
Bankruptcy also doesn’t protect a filer from bad spending decisions made after the plan to file has been made. All of your bad spending mistakes will still affect your financial status and could actually jeopardize certain parts of your bankruptcy plan, as well as changing the status of some protected assets.
Similarly, it’s important to recognize that bankruptcy isn’t a magic silver bullet that will destroy all of your financial problems. In fact, new complications can arise out of a filing, especially if all of the facts aren’t known about your financial history and assets when filing.
It’s also important to note that bankruptcy does not permanently affect your credit. While it’s certainly less than a good thing in the short term, the filing won’t leave a permanent black mark on your spending for the future. It is a good idea to consider a credit scrubbing service, however, as these services can remove some of the remaining problems with your credit post-bankruptcy.
Seeking the counsel of a qualified Fort Worth bankruptcy lawyer is the first step to understanding how these common misconceptions can be alleviated before filing your case.