Bankruptcy is a process riddled with myths and misconceptions. Ultimately, bankruptcy is an empowering step that helps people regain control of their financial affairs and reap the much-needed benefit of a fresh start. This reality, however, can get lost in the general public's rampant misunderstandings of what bankruptcy means and what it involves. To help clear up some of these misconceptions, three common bankruptcy myths are debunked below.

Dispelling 3 Common Bankruptcy Myths

1. Bankruptcy Leads to Financial Ruin

Many think that bankruptcy automatically equals financial devastation. They're under the impression that filing will result in abysmal lifelong credit scores, an inability to get new credit cards, and an automatic disqualification for home or car loans. Fortunately, none of this is accurate. When most people reach a point where bankruptcy is the only viable option, their credit scores are already so low that the filing doesn't make much substantial difference, and they can take action to start rebuilding credit right away. You can also open new lines of credit rather quickly, usually within a few months of filing. However, you should be aware of higher interest rates or finance charges.

2. You Lose Your House in Bankruptcy

As soon as you file for bankruptcy, all foreclosure action in the process against you must promptly stop. This is known as an automatic temporary stay, and it allows filers to remain in their homes. It also allows valuable time to consult with an attorney and explore ways to stay in the home on a permanent basis. Yes, in some cases, it might make more sense to sell the home and use the proceeds to pay off creditors. But this is just one option of many, and an attorney will discuss all possibilities with you.

3. Bankruptcy Gets Rid of All Debts

Unfortunately, this is not true. There are some types of unsecured debts that bankruptcy cannot eliminate. Student loans, late child support payments, and back taxes are just a few of the debts that typically cannot be discharged in bankruptcy. Before filing, your attorney will review all debts and ensure you understand which ones will remain after discharge.

Daniel R. McComb, Attorney at Law in Batavia, NY, is here to help guide you through the bankruptcy process. With more than 35 years of experience, he effectively and compassionately represents clients throughout Genesee County. He also offers legal services in personal and work-related injuries, disability claims, real estate transactions, and wills and estates. Call (585) 343-2250 or visit his website to schedule a free consultation.