At Walker & Walker Law, we know that bankruptcy can be a tough decision, and misinformation can make it even harder. There are many myths surrounding bankruptcy that can cause unnecessary fear and confusion. That’s why we’re here to set the record straight and debunk some of the most common myths about bankruptcy.
If you’re considering bankruptcy, it’s essential to have the right information so you can make the best decision for your financial future.
Myth 1: Filing for Bankruptcy Means You’ve Failed Financially
The Truth: Bankruptcy isn’t a sign of failure—it’s a tool designed to help people facing financial hardship get back on their feet. Life can throw unexpected challenges your way—job loss, medical bills, or a sudden decrease in income—and bankruptcy provides a fresh start for those who need it. It’s a responsible way to regain control of your finances and move forward with a clean slate.
Myth 2: You’ll Lose Everything You Own in Bankruptcy
The Truth: Many people fear that filing for bankruptcy means they’ll lose their home, car, and personal belongings. The reality is that bankruptcy laws are designed to protect your essential assets. In Minnesota, exemptions allow you to keep certain property, such as your home (up to a certain value), vehicle, retirement accounts, and household items. The goal of bankruptcy is to give you a fresh start, not to leave you with nothing.
Myth 3: Bankruptcy Will Ruin Your Credit Forever
The Truth: While bankruptcy will have a temporary impact on your credit score, it won’t ruin your credit forever. In fact, for many people struggling with overwhelming debt, bankruptcy can be the first step toward rebuilding credit. By managing your finances responsibly after bankruptcy—such as paying bills on time and using credit wisely—you can start improving your credit score within a year or two. Many of our clients are surprised to find that they receive credit offers soon after their bankruptcy is discharged.
Myth 4: You Can’t Discharge Student Loans in Bankruptcy
The Truth: While it’s true that discharging student loans in bankruptcy can be challenging, it’s not impossible. Recent changes in federal policy have made it easier for some borrowers to seek relief from student loan debt through bankruptcy. Our experienced team at Walker & Walker Law has successfully helped clients discharge student loans in certain cases. Every situation is unique, so it’s worth exploring your options with a knowledgeable bankruptcy attorney.
Myth 5: Only Irresponsible People File for Bankruptcy
The Truth: This myth couldn’t be further from the truth. The reality is that most people who file for bankruptcy are hardworking individuals who have encountered unexpected financial setbacks. Whether it’s due to medical bills, divorce, job loss, or other unforeseen circumstances, bankruptcy can provide a lifeline for those who need it. It’s a responsible way to address your financial situation and protect your future.
Myth 6: You Can Only File for Bankruptcy Once
The Truth: You can file for bankruptcy more than once, although there are time limits between filings. For example, if you’ve previously filed for Chapter 7 bankruptcy, you’ll need to wait eight years before filing for Chapter 7 again. If you’ve filed for Chapter 13, you may be eligible to file for Chapter 7 after six years. Bankruptcy laws are designed to give you the chance to rebuild your financial life, even if you need more than one opportunity to do so.
Myth 7: Bankruptcy Will Solve All Your Financial Problems
The Truth: While bankruptcy can provide significant relief from overwhelming debt, it’s not a cure-all for every financial challenge. Bankruptcy can eliminate many types of debt, such as credit card debt and medical bills, but some debts—like student loans, child support, and certain taxes—may not be dischargeable. It’s important to understand what bankruptcy can and cannot do for you and to work with an experienced attorney to develop a comprehensive financial plan.
Get the Facts and Make Informed Decisions
At Walker & Walker Law, we believe that knowledge is power. By debunking these common myths about bankruptcy, we hope to empower you to make informed decisions about your financial future. If you’re struggling with debt and considering bankruptcy, we’re here to help. Our team of experienced attorneys will guide you through the process with respect and compassion, ensuring that you understand all your options.
Don’t let myths and misconceptions hold you back from the fresh start you deserve. Reach out to Walker & Walker Law today for a free consultation and take the first step toward financial freedom.
