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What are the common myths about filing for bankruptcy?

On Behalf of | Jul 25, 2024 | BANKRUPTCY LAW - Bankruptcy |

As the weight of debt continues to burden debtors, they may be wondering if bankruptcy is a viable solution to their financial woes. Despite its reputation as a last resort, bankruptcy can be helpful to those seeking to regain control of their finances.

However, misconceptions surrounding the process can prevent people from exploring this option. If you are considering filing for bankruptcy, how can you separate fact from fiction to better understand this complex topic?

Is bankruptcy only for businesses?

Many people believe that bankruptcy is only for businesses. However, bankruptcy laws aim to provide relief to individuals and businesses struggling with debt.

Will filing for bankruptcy ruin your credit score forever?

Another myth is that filing for bankruptcy will ruin your credit score forever. While bankruptcy will lower your credit score, it is not a permanent stain. This makes it possible for debtors to rebuild their credit scores within a few or more years of filing for bankruptcy.

Will you lose all your assets in bankruptcy?

In addition, some people believe that filing for bankruptcy means you will lose ownership of all your assets. However, this is not necessarily true. In Wisconsin, debtors are allowed to exempt certain assets, such as their primary residence, from bankruptcy proceedings. This means that, in certain cases, you can keep your home and other essential assets.

Does filing for bankruptcy mean you are a failure?

Further, some believe that bankruptcy is a sign of failure or irresponsibility. On the contrary, it is a legal tool that seeks to help those facing debt due to circumstances beyond their control, such as job loss, medical emergencies or divorce.

Seeking to achieve a brighter financial future

Amid the myths surrounding bankruptcy, the truth is it can provide a fresh start by helping you get back on your feet. However, navigating the bankruptcy process can be challenging. With legal guidance, you may approach bankruptcy with more confidence as you seek to make informed decisions toward achieving a brighter financial future.