Many residents of New Jersey may end up filing for bankruptcy at some point. Although it should only be used as a last resort, it can help you make a fresh start with your finances. If you’re on the fence about filing, you should know the most common myths about the process.
It permanently damages your credit
One of the biggest bankruptcy myths is that if you file, it will permanently damage your credit. In reality, while your credit will dip initially, this is only temporary. Over time, once you have worked to pay off your debts and repair your financial situation, your credit score will go back up.
It lets you discharge all debt
Many people think that bankruptcy allows you to discharge all of your debts. This is not true. With Chapter 7 bankruptcy, you can discharge unsecured debts like credit card bills, medical bills, and personal loans. However, debts such as alimony and child support cannot be discharged.
If you file for bankruptcy, you’re foolish with your money
A big misconception about bankruptcy is that everyone who files is foolish and irresponsible with their money. In reality, many people need debt relief due to circumstances beyond their control such as losing their job or falling ill and having large medical bills to pay back. Bankruptcy is a much-needed solution for people who are in situations like that to get back on their feet.
Married couples must both file
A person who is married to someone who filed for bankruptcy doesn’t have to also file. Although it’s possible for both spouses to owe a debt, this isn’t always the case. Sometimes, only one spouse has amassed debt. Filing separately is the best option in that situation. It’s a myth to believe both spouses have to file for bankruptcy.
If you file, you will lose everything
A common myth about bankruptcy is that if you file, you’ll lose everything you own, including the shirt off your back. This isn’t true. You can keep most of your belongings, your home, and your vehicle.