Filing for bankruptcy can be stressful, no matter what your situation is. But with so many myths and misconceptions surrounding this debt solution, filing can seem like a bad idea. Though the myths are pervasive, your South Carolina bankruptcy attorney wants you to know that filing can be in your best interest. It just depends on your situation. To help you better understand your options, we’ve put together a list of some of the most common myths surrounding bankruptcy and what makes them wrong.
Bankruptcy Will Tank Your Credit Score Forever
Bankruptcy can and will have an impact on your credit score. The higher your score is when you file, the more significant the change will likely be. But that drop shouldn’t last forever. Bankruptcy only shows up on your credit report for between seven and ten years. During that time, you’re able to rebuild your credit score by paying your bills on time and in full or starting over with a credit building loan or credit card. As long as you exhibit good financial habits and commit to rebuilding your credit score, the drop after filing for bankruptcy won’t last forever. In fact, most people see improvements after just a few months post filing.
You Can Only File Once
Though many people file for bankruptcy once and find ways to maintain healthy finances, there’s no law on the books limiting the number of times that you can file for bankruptcy. As long as you meet South Carolina’s eligibility requirements, you’ll be able to file a Chapter 7 every 8 years and a Chapter 13 every 2 years. Keep in mind that every time you file will result in damage to your credit score. You may want to speak with a financial professional to see if there are things you can do to improve your finances if you think you’ll need to file more than once.
You’ll Lose Everything Once You File
Though bankruptcy courts can seize some of your assets to settle your debt, you won’t lose everything when you file. South Carolina has a detailed list of exemptions including the following:
- Your home provided it meets the value requirements
- Your vehicle
- Furnishings
- Retirement funds
- Life insurance policies
- Child support payments
- Unemployment compensation
- College funds
- And more
Speak with your South Carolina bankruptcy attorney to learn more and to determine which assets you may be able to keep if you file.
Paying Off Debts Is Always Better Than Filing for Bankruptcy
Conventional wisdom suggests that paying off debt is always better than filing for bankruptcy. While this can be true in some instances, it’s not true every time. If you’re in over your head and can’t afford to pay the minimum balances you’re required to pay, filing for bankruptcy can be the best choice. Often, repaying high amounts of debt can be more stressful and just as damaging to your credit score as filing for bankruptcy.
When you carry a high balance, your credit utilization ratio stays high which can cause your credit score to drop continually. Over time, your score could drop just as much as it would if you filed for bankruptcy. But instead of having your debts forgiven, you’d be responsible for making payments until they’re repaid in full. By filing for bankruptcy, your debts will be forgiven and, though your score will drop, you’ll be able to rebuild it.
Married Couples Can Only File for Bankruptcy Jointly
Though married couples often share debts, you don’t necessarily have to file for bankruptcy jointly. If one person has high amounts of personal debt, they may be able to file individually. Your bankruptcy attorney will help you decide the best course of action.
Let Lam Law Firm Help
Filing for bankruptcy can be a great choice for many people. If you’re considering filing, make sure to work with an experienced South Carolina bankruptcy attorney. Contact Lam Law Firm to schedule a free consultation and see how our team can help.
