Financial difficulties are a huge burden to thousands of people. Many continue to struggle long past the point that they should. Oftentimes, people resist the obvious option of bankruptcy because they have misconceptions about it, or fear its implications. In this post, we’ll explore some of the most prevalent myths about bankruptcy and how much truth they actually contain.
History of Bankruptcy
Before and shortly after the creation of the United States, businesses and persons owing money could be consigned to debtors’ prison and have all their property confiscated. Bankruptcy was involuntary; it was something done TO you, not a choice you made. In 1841, bankruptcy became voluntary. As the legal system for bankruptcy developed, bankruptcy changed from a quasi-criminal act, to one focused on resolving financial issues in the best way possible. A Congressional Act in 1978 made major changes, and another in 1984 confirmed the function and scope of the free-standing bankruptcy courts. Subsequent amendments to the system have made it easier for family farmers, small businesses, and consumers to pursue bankruptcy. So our legal system has worked consistently over the last 180 years to make bankruptcy a viable option for people in financial straits. Given this history, let’s examine some of the myths still associated with bankruptcy.
Filing Bankruptcy Makes You A Failure
You may believe that bankruptcy comes with the stigma of failure. That could not be further from the truth. It is designed to be a tool that individuals and businesses can employ when necessary. And both individuals and businesses do so on a regular basis without qualms. Think about some of the major companies that have gone through bankruptcy or restructuring; think about some of the famous people that have done so. Many successful people have bankruptcy in their pasts, and in fact, may not have achieved current success without pursuing bankruptcy.
You Will Lose Your Possessions
You may think that declaring bankruptcy will automatically mean that you lose your house, your car, and your most valuable possessions. Bankruptcy is not meant to punish you, but to ameliorate the situation in the most reasonable way. Bankruptcy law includes exemptions, and Wisconsin is one of only 16 states where you can choose whether to take advantage of the federal or state exemptions. Your retirement accounts will not be drained; you will not lose your vehicle. Working with specialist bankruptcy attorneys will ensure that you protect your most important assets.
It Will Ruin Your Family Life
This fear is perhaps the most insidious and the most easily debunked. If you’re constantly worrying about overwhelming debt, you likely feel depressed and act distracted. Ignoring your situation can cause mounting family issues in innumerable ways. When you’re being hounded by debt collectors, it’s impossible to enjoy a happy family life. One you file for bankruptcy, all collection activity has to cease. Working with the experts at Burr Law, you can relax. Your desperate financial situation will be dealt with, and you will feel not only relief, but satisfaction that you are taking action. Once again, you can start to enjoy your family life.
Bankruptcy Will Haunt You Forever
Bankruptcy stays on your credit report for 10 years; that’s true. But if you are behind on all kinds of payments, your credit score is probably already quite low. It’s entirely possible for you to qualify for a mortgage after bankruptcy. There are ways to rebuild your credit and the professionals at Burr Law can guide you through that process as well. There is absolutely no need to believe that bankruptcy will affect the rest of your life.
Many people don’t declare bankruptcy when it makes sense for them to do so because they believe these myths about bankruptcy. Delaying can exacerbate the problem. Don’t allow your decisions to be based on misperceptions. Know the facts about bankruptcy. Contact Burr Law, and we can advise you about the best way forward in your particular circumstances.