Bankruptcy rumors persist even though over 750,000 American families file for Bankruptcy every year.

Myths and fears about bankruptcy aren’t harmless. They frighten families into making bad financial decisions, such as withdrawing money from a retirement fund to pay off bad debt or continuing to pay creditors long past the point where it makes sense to do so.

That’s why we’d like to take a moment to debunk some of the most common bankruptcy fears. 

Fear: I’ll Never Recover Financially

Fact: most people who file for bankruptcy recover fully two years after their discharge.

In fact, bankruptcy can raise your credit score, put money back in your budget, and give you a path forward. If you’re strategic about building your new financial future, bankruptcy could be your best decision. 

Fear: Bankruptcy Is a Moral Failure 

Fact: bankruptcy is a legal process that is baked into our financial system. Thousands of corporations use bankruptcy to get out of paying their legal obligations every year. Some of those obligations include payroll and pension payments.

Why shouldn’t you use the same 100% legal mechanism that rich CEOs use? You’re just trying to feed your family. They’re trying to hold on to as much wealth as possible. 

Most of the population is one paycheck away from homelessness right now. It doesn’t make sense to stay hard on yourself when you live in a system that is blatantly rigged against you. Capital One will be okay, we promise.

Fear: We’ll Lose All Our Assets

Fact: many assets can be protected with bankruptcy exemptions. This includes retirement funds, cars, home equity, and more.

If you file the right bankruptcy chapter and take the right legal steps, you can even stay in your home and keep your car if you want to. The key is to work closely with a lawyer to help you protect the most important assets.

Fear: Bankruptcy Will Ruin My Career

Fact: bankruptcy doesn’t impact most careers.

You could face some trouble if you work in the financial industry or if you have a security clearance. Yet sometimes, filing for bankruptcy puts you in a better position with such employers, not worse. 

If you’re not in an industry where your employer is pulling your credit report as a matter of course, then your boss will never know about your bankruptcy unless you choose to tell them about it. 

Fear: I’ll Make Mistakes

Fact: if you work with a qualified bankruptcy law office like ours, you don’t have to worry about making major bankruptcy mistakes.

We’ll help you choose the right chapter, navigate sticky situations, and stay on top of paperwork and other steps you’ll need to take to discharge your debt successfully. 

Ready to get started? Contact us to schedule a free consultation today. 

See also:

How to Prepare for Bankruptcy

4 Ways to Protect Yourself During the Bankruptcy Process 

Will Bankruptcy Stop You From Getting a Job?