There is often a lot of confusion surrounding the topic of bankruptcy, and it really is hard to fully understand it unless you go through it. In fact, there are some major misconceptions about bankruptcy in general, and here are three things that you should know about it that you might not realize.
It Generally Does Not Eliminate Every Single Debt
The first thing people often believe about bankruptcy is that it will eliminate every debt they have. While it can do this in some cases, it generally does not. Debts are not all equal in bankruptcy. There are debts that it will eliminate through a discharge, but there are also debts that it will not eliminate. It is often hard to know how this works without talking to an attorney, which is why you should always talk to a lawyer before making the decision to file or not. This discussion will help you see clearly how bankruptcy will help you and where the limits are.
It Is Not Free
A second thing you might not know about bankruptcy is that it is not free. First of all, there are fees that you must pay to file a bankruptcy case, and these are called filing fees. The fees vary by bankruptcy branch, but you should expect to pay these even if you do not hire a lawyer for help. Secondly, there are fees for the lawyer you use. Lawyers make money by charging fees for the work they do.
If you are in a position where you cannot afford to pay the fees, you could always ask your lawyer about ways around this. You might qualify for help through a government program for the fees that are required, but this is not always easy to do.
It Does Not Always Harm Credit as Much As People Think
The other thing to know is that bankruptcy does not always harm credit as much as people think it would, and the reason for this is due to the credit score a person has prior to filing. A person who needs bankruptcy often already has a low credit score. Filing might decrease it slightly, but with the right steps afterward, a person's credit might actually be better than it was before the person filed.
A good thing to do is to meet with a bankruptcy lawyer to ask all the questions you have about bankruptcy before you file so that you know more about it. To do this, simply contact a bankruptcy law firm to schedule a consultation visit.