At McElroy & Associates, We Understand That Bad Things Can Happen To Good People

Get A Fresh Start Through Bankruptcy

Troubling bankruptcy myths

On Behalf of | May 12, 2022 | blog, Chapter 13 Bankruptcy, Chapter 7 Bankruptcy |

Memphis consumers whose financial situation becomes dire might think about filing for bankruptcy. Federal bankruptcy statutes allow Tennessee debtors to put at least a temporary halt to collection activities. Unfortunately, many would-be filers prescribe to false narratives and misconceptions about bankruptcy. For example, some might not want to drag their spouses into the courts, although that would only be necessary when dealing with jointly-held debt. These and other myths could keep people from seeking a legal solution to their woes.

Bankruptcy fallacies

Several other myths might prevent someone from filing for Chapter 7 or 13. The notion that bankruptcy remains on credit reports forever would be another inaccurate assessment. After a set number of years, bankruptcy filings will disappear from a credit report.

Other misconceptions center on the belief that bankruptcy will involve liquidating all assets to pay creditors. That’s not true, as the courts won’t leave someone destitute with no home, car, or savings. Some assets are exempt. Be mindful that some debts are prioritized, meaning the debtor would still have to pay them.

Anyone who thinks bankruptcy won’t require the liquidation of any assets would be mistaken. After all, Chapter 7 involves liquidation bankruptcy. Some assets will undergo liquidation, but the debtor may not have to pay certain debts.

An approach to bankruptcy

Bankruptcy presents people with a chance to restart their lives financially. Yet, some persons fear that others will believe they found themselves in such a situation due to irresponsibility. Many people file for bankruptcy protection for reasons outside their control. Massive medical debt stands as a common reason.

Anyone considering bankruptcy may benefit from learning more about the process. Doing so could reveal information that counters troubling myths.