Almost 500,000 Americans file for bankruptcy every year and 95.5% of bankruptcies are discharged, meaning the person is no longer legally required to pay back most of their debts. Despite how common and effective bankruptcy is, there are still some persistent myths about bankruptcy that are hard to dispel. Let’s take a look at the truth behind filing for bankruptcy.
What Can Bankruptcy Do for Me?
Bankruptcy is a way of dealing with debt for people who are having financial difficulties. During the bankruptcy process, a judge will review your circumstances and determine whether you qualify for a Chapter 7 bankruptcy to wipe out most debts. If a person does not qualify for a Chapter 7, the Court will determine how much a debtor must pay back to creditors in a Chapter 13. Bankruptcy is also a way to halt a home foreclosure and prevent further garnishments of your paycheck. In addition, it stops most creditors from hounding you because the law requires them to stop contacting you during your bankruptcy, and after your discharge.
What is the Cause of Most Bankruptcies?
Most bankruptcies do not occur because of lavish spending or fiscal irresponsibility. By far, the number one cause of bankruptcy in the United States is medical debt. The good news is medical debt can almost always be reduced or eliminated by bankruptcy. Other leading causes of bankruptcy include job loss, divorce, illness or injury that temporarily or permanently stops a person from making an income and unexpected expenses.
Will Bankruptcy Wipe Out All of My Debts?
Another important truth about bankruptcy is that it does not eliminate all types of debt. It won’t cancel out alimony payments, child support payments, student loans, back taxes or government fines. Also, you probably won’t be allowed to use bankruptcy to “pay off” expensive luxury items you purchased just prior to the bankruptcy, like a yacht or vacation home. However, you can usually eliminate credit card debt, unsecured loans, memberships and medical bills during bankruptcy. This goes a long way toward helping you become financially stable.
What Are the Consequences of Filing for Bankruptcy?
Filing for bankruptcy can feel emotionally draining because it takes time and requires you to follow a complex set of steps. Your creditors will become aware that you have filed for bankruptcy and it will remain on your credit report for up to 10 years. It could also be a few years before you qualify for a home mortgage and other types of loans. Don’t let these possible effects scare you, though. Bankruptcy is a responsible choice that tackles your financial liquidity head-on. With the help of an experienced bankruptcy attorney, you can streamline the bankruptcy process and get a fresh start as soon as possible.
Sawin & Shea – Indianapolis Bankruptcy Attorneys
Filing for bankruptcy is not the end. It’s the beginning of a new financial life for you. The Indiana bankruptcy attorneys at Sawin & Shea can help you get rid of the overwhelming debt and advise you on life after bankruptcy. We are here for you during this life-changing process. Please do not hesitate to call us today at 317-759-1483 for a free consultation. We are ready to help.