Five Common Florida Bankruptcy Myths

Most people try to avoid bankruptcy, fearing the worst if it is unavoidable. Recent statistics show the filing of close to 400,000 non-business bankruptcies in the U.S., so this is not an uncommon practice.

If you are sinking into debt and see no feasible way out, consulting a Florida debt defense lawyer is the first strategic choice when threats and relentless calls at home and work become too challenging to handle. Even when bankruptcy is the option, establishing control of your financial situation can start you on a path of financial and emotional healing. 

Bankruptcy Myths

Florida ranks second for the number of bankruptcy cases in the U.S., so you may know someone who has had to file for bankruptcy. Medical debt is a significant contributor to financial hardship, especially in uninsured or underinsured populations. 

But myths differ from facts. A myth is defined as a widely held idea that is false. What are the common bankruptcy myths in Florida, and what are the facts that apply?

I Will Never Have Good Credit Again

It is surprising to most people that moving your FICO credit score from bad to fair can be accomplished in 12 to 18 months. Carrying a heavy debt load can affect your credit, so filing for bankruptcy can allow you to become debt-free, improving your credit score. You will soon be able to work on building your credit again.

I Will Lose Everything I Own

The most common type of bankruptcy is Chapter 7, or liquidation. Under the law, specific properties cannot be seized with seizable property often possessing insufficient equity. These bankruptcies are considered no-asset cases, so you will likely keep your property.

Chapter 13 bankruptcy is the reorganization of debt that allows someone with a reliable income to keep their home, stopping foreclosure or repossession. A repayment plan will be mandated to allow the debtor to catch up on back payments and pay portions of any unsecured debt. After successful completion of the repayment plan, additional remaining unsecured debt may be discharged.

Bankruptcy Will Remove all of My Debt

Certain debts must be paid under the law and cannot be discharged. Those debts include alimony or spousal maintenance payments, child support, and some unpaid taxes. Other debts that cannot be discharged are malicious or willful injury to a person or property. And it is rare that student loan debt can be removed.

I Must File for Bankruptcy if My Spouse Files

Debt often involves both parties in a marriage. However, if one spouse has more financial obligations than the other, it may be beneficial for only one spouse to file bankruptcy, leaving one partner’s credit unaffected. This strategy can help protect assets if the partner with less debt load possesses more property or assets with value.   

A Florida debt attorney can sort out the specifics of your case to help  preserve your most valuable assets if only one partner files for bankruptcy.

I Will be Unable to Afford Legal Representation

There are ways to pay an attorney when beginning Chapter 7 proceedings. Delaying credit card payments can allow you to shift funds to afford representation. When filing for Chapter 13 bankruptcy, the funds used to pay off your creditors can also be used to cover legal fees allowing for a lawyer to represent your case, so you would pay nothing to retain representation.

The Reality of Bankruptcy

Bankruptcy myths can be paralyzing, leaving you feeling you have no options to end the financial nightmare. But the reality is that bankruptcy may be the best option for your family if you cannot climb out from under mounting debt. Economic upheaval can happen unexpectedly, through no fault of your own.

Dispel bankruptcy myths when you work with Sharmin & Sharmin P.A., and discover factual guidelines to navigate bankruptcy and emerge with a workable plan. We believe in solving your most challenging problems and maintaining integrity through difficult trials. Our service and respect for your case will be unmatched.