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Why is there a stigma attached to bankruptcy?

On Behalf of | Apr 27, 2021 | Bankruptcy |

Indianapolis residents likely work hard to become financially independent and achieve their goals. Debt, especially overwhelming debt, can be viewed as a sign of failure and an inability to manage their finances, which is why many debtors hesitate to ask for help.

What they don’t realize is that they are only hurting themselves in the process and making their own financial recovery harder. The myths mentioned below are common reasons people hesitate from filing for bankruptcy that can get their life back on track.

Bankruptcy filers are financial irresponsible

There are many reasons someone may file for bankruptcy, and many of them are unexpected. Loss of a job, injury or death, or divorce are just some of the reasons people face an increase in expenses. None of these reasons can be controlled but can have a devastating effect on one’s finances.

All debts are discharged through bankruptcy

While filers get a fresh start through bankruptcy, not all debts are discharged. Domestic support obligations are not removed, and neither are many student loans.

Credit history can never be repaired after bankruptcy

While it is true that bankruptcy does stay on one’s credit report for a number of years after filing, it is not indefinite. Firstly, it is important to keep in mind that credit history was likely taking a hit from making late payments on credit cards or not making the minimum payments. Secondly, this score starts improving soon after debts are discharged and it is possible to take steps to keep that upward trajectory moving.

Bankruptcy is by no means the easy way out. It provides a legal way to get a fresh start financially to those who are struggling to make ends meet. to determine which type of bankruptcy would best suit one’s situation, it might be helpful to consult an experienced attorney.