Bankruptcy myths often keep people from escaping serious financial problems because they never find out the truth. There are several bankruptcy myths to be debunked that may help you decide whether bankruptcy is the right option for you. You may not have to stay stuck with your financial problems or debt for much longer. Reach out to a Kingsport bankruptcy lawyer to start figuring out your options for bankruptcy.
Top Bankruptcy Myths
Exploring some of the top bankruptcy myths may help you better decide whether bankruptcy is the right option for you. When it comes to deciding bankruptcy, the most important myths to be wary of are myths about what bankruptcy can do. Many people think bankruptcy can erase any debt.
Others think they can use bankruptcy for anything. Whether this be escaping legal fines, unpaid bills, car payments, or mortgage payments. Some people hope that bankruptcy can stop alimony and child support payments. Taxes are also a common financial problem that many people hope bankruptcy can help them escape.
The reality is that bankruptcy cannot erase all debts. Bankruptcy cannot solve every financial problem either. What bankruptcy can do is erase certain debts to make financial recovery easier. Other things bankruptcy can do is give you more time to repair your financial situation and open up opportunities for more affordable payment plans.
Debunking Bankruptcy Myths
One of the most common myths about bankruptcy revolves around credit scores. Many people think of bankruptcy and credit scores as detrimental. While bankruptcy does not completely destroy a credit score forever, it is also important to recognize the realistic effects of bankruptcy on credit scores.
The reality is that bankruptcy significantly lowers credit scores by up to 240 points. This can last about 7 to ten years depending on the type of bankruptcy that is filed. How much your credit score is impacted by bankruptcy depends on how much debt was discharged and other factors.
Even if your credit score is lowered significantly, your credit score is not stuck this way. There are multiple ways to rebuild a credit score. The myth that credit scores are permanently damaged after bankruptcy is false. This also debunks the common myth that no one can recover from bankruptcy. Many people have recovered by taking active steps to repair their finances after bankruptcy.
A myth specific to college graduates is that bankruptcy can never discharge student loan debt. However, bankruptcy for student loans is possible under certain circumstances but only for certain types of student loans. Examples of some of these conditions include when a student attended college less than half-time, the loan was higher than the cost of college attendance, or student loans were used for living costs for medical or dental residency.
Call Tom Bible Law for Legal Aid
You may not have to go through bankruptcy alone. Start by contacting us at Tom Bible Law today at (423) 424-3116 for a consultation about your financial situation. Our experienced team of Tennessee bankruptcy attorneys is ready to help you navigate the complex and stressful process of bankruptcy. We are located in the Tennessee cities of Chattanooga, Kingsport, and Tullahoma.