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Five myths about bankruptcy

Credit card debt can get out of control. An unpaid balance gathers interest, and can quickly grow into something outrageous. Unexpected changes, such as the loss of a job, can set a debtor back, and turn the unpaid balance into something that is almost impossible to pay off. When that happens, it is important for Tennessee residents to have an accurate picture of their options. One option is to file for bankruptcy. And yet, a variety of myths continue to swirl around filing for bankruptcy.

A commonly held myth is that if people file for bankruptcy they must be financially irresponsible. Many people are reluctant to seek out the help they need through bankruptcy simply because they are afraid of the stigma this myth places on those who file for bankruptcy. The truth is often far different. In fact, it is much more likely that a person who has filed for bankruptcy has gone through one of three situations: a divorce, a job loss or a serious illness. All these events can create financial havoc, and make paying bills next to impossible.

Another myth is that bankruptcy wipes out all debts. But not all debts are created equal. Certain debts cannot be discharged through bankruptcy, and certain other debts can be exceedingly difficult to wipe out through bankruptcy.

A third myth is that if a person chooses to file for bankruptcy, they can simply spend as much as they want because they won't have to pay it back. Not true. Courts consider this kind of behavior fraud, and debts incurred through fraud cannot be discharged through bankruptcy.

As these examples highlight, many people have important misconceptions about bankruptcy that prevent them from knowing whether bankruptcy is the right option. Those who are experiencing financial difficulty can talk to a bankruptcy attorney about their options and decide on a path that will get them back to financial health.

Source: U.S. News, "5 Bankruptcy Myths Debunked," Susan Johnston Taylor, May 14, 2012

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Mark T. Young & Associates
2895 Northpoint Blvd.
Hixson, TN 37343

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