Bankruptcy law gives debtors the opportunity to get a fresh financial start by either discharging what they owe (chapter 7 bankruptcy) or creating manageable payment plans (chapter 11 or 13 bankruptcy). Unfortunately, misinformation about bankruptcy is common. To help you better understand the basics, here are some of the most common myths.

The Truth Behind Bankruptcy Law Misconceptions 

1. Bankruptcy Will Ruin Your Credit

While filing for bankruptcy will negatively affect your credit report, there are many ways for you to turn your credit score around. Some credit agencies offer cards that are designed specifically for clients with poor credit. These are easier to qualify for and give you the chance to start responsibly rebuilding your credit right away. You can also apply for a secured credit card, which allows you to put down a refutable deposit in exchange for credit.

2. It Will Erase All of Your Debt

While filing for bankruptcy can erase the majority of your commercial debt, bankruptcy law does not allow you to discharge everything. If you owe back taxes, for example, you’ll still be responsible for paying them. You also cannot discharge past-due child support, alimony, student loans, or any payments owed due to a “willful and reckless act,” such as a DWI charge or other court judgment. An attorney will be able to tell you which debts you likely won’t be able to get rid of.

3. Filing for Bankruptcy Is a Sign of Failure

Bankruptcy law exists to help people who have gotten in over their heads financially, which does not always happen as a result of low income or irresponsible spending. Many people who file do so because they’ve encountered problems they had no control over, such as job loss, injury, or prolonged illness. In fact, according to a 2019 study published by the American Public Health Association, more than 66% of all bankruptcies in the U.S. are the result of serious medical issues.

If you’re struggling with debt and think filing for bankruptcy might help, Steven P. Ciardiello, Esq., P.C. is eager to hear from you. For more than 30 years, this attorney has been helping clients in the Hamden, CT, area achieve solvency and reclaim their financial lives. The firm also specializes in personal injury claims, estate planning, wills and trusts, and more. Visit their website to learn more about the practice, and call (203) 248-8000 to set up a consultation.