Bankruptcy is a complicated and emotional issue. Therefore, it’s not a surprise that there is a lot of misinformation out there on the topic. In this article, we clear up some common bankruptcy myths. For additional information on bankruptcy, please contact an experienced Chicago bankruptcy attorney.
Bankruptcy Filers Are Irresponsible
People often characterize bankruptcy filers as irresponsible. This isn’t often the case, however. In fact, the three most common causes of bankruptcy are severe illness, divorce, and job loss. Therefore, filing for bankruptcy is nothing to be ashamed of, and anyone having serious financial problems should seriously consider filing.
Married Couples Both Must File
If one spouse files for bankruptcy, the other isn’t necessarily required to do the same. It isn’t unusual for one spouse to have a significant amount of debt that is solely in his or her name. In this type of situation, the spouse who owns the debt can file alone.
Bankruptcy Permanently Destroys Your Credit
While bankruptcy will definitely affect your credit score and limit your credit options in the seven to ten years after filing, the results are by no means permanent. In fact, many filers are surprised at how quickly their credit scores recover from bankruptcy.
You Can Spend Without Consequences Immediately Prior to Filing for Bankruptcy
People sometimes decide that since they are going to file for bankruptcy anyway, they might as well max out their credit cards before filing. After all, bankruptcy will eliminate the debt, right? Wrong. Actually, courts consider this a form of fraud, and debt that is incurred as a result of fraud cannot be discharged in bankruptcy.
Bankruptcy Gets Rid of All Debt
Chapter 7 bankruptcy discharges many types of unsecured debt, including credit card charges, personal loans, back rent, utility bills, and medical bills. In fact, Chapter 7 bankruptcy can even eliminate some types of secured debt. However, some debt cannot be discharged in bankruptcy, including child support, spousal support, and student loan debt.
Bankruptcy Filers Lose Everything
Finally, contrary to popular belief, you won’t lose everything if you file for bankruptcy. In fact, most property in a bankruptcy filing is exempt. In fact, debtors in bankruptcy often keep many items that aren’t exempt. For example, items like television sets and other gadgets are generally of no value to creditors. In addition, many assets either have little intrinsic value or are encumbered with debt themselves.
Contact Our Experienced Chicago Bankruptcy Attorneys
If you are considering filing for bankruptcy in Chicago, you need a Chicago bankruptcy attorney on your side. At Chicago Bankruptcy Clinic, our attorneys will handle all the details of your Chicago bankruptcy filing with professionalism and compassion. When you come to our experienced bankruptcy attorneys for help, you can rest assured that your Chicago bankruptcy case is in good hands. Please contact us today to schedule a free consultation with one of our talented bankruptcy attorneys.