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The many myths of bankruptcy

On behalf of Cohn Lifland Pearlman Herrmann & Knopf LLP | Jun 4, 2020 |

Filing for bankruptcy is a huge step in any person’s life, and it’s easy to be overwhelmed by the financial and emotional weight of this legal process. There are many steps involved in bankruptcy, and the complicated nature of a filing means that most people will be anxious about the outcome. There are also many fears filers will have going into the bankruptcy process-many of which are unfounded.

The myths of bankruptcy are many, so let’s discuss some of them here. One of the primary fears that people have is that when they file for bankruptcy, their reputation will be ruined forever. It’s the idea that once you file for bankruptcy you are somehow tainted for life, and that people will reference your bankruptcy until your final years. This simply isn’t true. Many people that go through bankruptcy are able to regain their financial footing and successfully rebuild their lives in the wake of a filing. 

Along these same lines, people think that after a bankruptcy filing they won’t be able to get new lines of credit or that their credit score will never recover. Again, these are myths. Your credit score will take a hit in the short-term, yes-but you can rebuild it with hard work and financial diligence. Additionally, you can get new lines of credit if you maintain that newfound financial discipline and responsibility.

Last but not least, you shouldn’t think that you are somehow a failure just because you file for bankruptcy. Plenty of people fall into tough financial times, and this doesn’t mean you are irresponsible. Sometimes a medical emergency or spiraling debt runs amok in our lives, and even the best of us wouldn’t be able to handle it. A bankruptcy filing can help you get out from under such an immense mountain of debt and make a fresh start.