Bankruptcy is a complex and often misunderstood financial tool. It’s easy to assume the worst when you hear about someone filing for bankruptcy, but the reality is far more nuanced. In fact, bankruptcy laws are designed to give people a fresh start and can be a responsible way to handle unsustainable debt. Here are some surprising facts about this concept you might not have known.
1. It Not Have Permanent Effects On Your Credit Report
Firstly, bankruptcy is not a financial death sentence. While it’s true that filing does have significant impacts on your credit report, these effects are not permanent. According to Experian, Chapter 7 bankruptcy stays on your credit report for 10 years from the date you file, while Chapter 13 remains for seven years. However, many people can begin rebuilding their credit almost immediately after their case is closed.
2. Certain Debts Cannot Be Removed
Secondly, not all debts can be wiped out by bankruptcy. Types of debt such as student loans, alimony, child support, and certain types of tax debts are typically not dischargeable through bankruptcy. This means you will still be responsible for these debts even if you file. Knowing this can help individuals make more informed decisions about whether this is the right option for them.
3. It’s Not As Expensive As You May Think
Another lesser-known fact is that filing for bankruptcy might not cost you as much as you think. Many assume that the legal fees associated with this procedure are overwhelming, but there are different types of bankruptcy, each with its own cost structures. Chapter 7 is often less expensive and quicker than Chapter 13 which involves a repayment plan over several years. Depending on your financial situation, you might be eligible for reduced fees or even free legal assistance.
Bankruptcy is a complicated subject riddled with misconceptions. It is a tool designed to help people regain their financial footing, and should not be viewed purely as a last resort. Whether you are considering bankruptcy or simply aiming to become more financially literate, knowing these facts can provide valuable insights. To receive professional legal guidance from expert lawyers for bankruptcy cases, don’t hesitate to get in touch with The Bankruptcy Law Offices of James Schwitalla, P.A. We’re here to provide you with the support you need.