Bankruptcy is a word almost everyone knows. From the board game Monopoly to the evening news, everyone has a general idea of what bankruptcy means. However, even with a concept that traces its origins to ancient Rome, there are misconceptions people often believe. With bankruptcy filings becoming increasingly more common, it is important to clear up these common misconceptions.
Will I Lose my House, Car, Stuff?
First, and potentially the most important, is the common belief that when someone files bankruptcy, they lose all their assets. While the Court does limit the amount of assets, both in value and quantity a filing person may possess, the individual filing bankruptcy does not have to give up everything. In most cases the person filing for bankruptcy does not have to give up their home, their car, money in the bank account, and the personal possessions in their home. The Court allows individuals filing for bankruptcy the ability to protect these assets from those whom they owe money. The multiple options when filing bankruptcy allow for the process to be customized to the individual’s needs to the extent the law allows.
What about my Credit Score?
Another very common misconception about bankruptcy concerns the effect of a filing on the individual’s credit score. A credit score is one of the more important parts of an individual’s financial well-being. Bankruptcy can actually improve the credit score upon completion of the bankruptcy process. When behind or delinquent on payments to a mortgage, credit card, car payment or other debt, the filing of a bankruptcy tends to increase the score of the individual. Clients here at Martin L. Rogalski, P.C. have seen scores rise in the neighborhood of 50-100 points upon completion. The removal of delinquent payments from an individual’s credit score outweighs the negative impact of the filing of bankruptcy.
It’s more common than you think…
The concept of bankruptcy carries a negative stigma despite how common the process can be. From General Motors to your neighbor down the street, bankruptcy is much more common than we tend to believe. In 2023 alone, according to statistics gathered by the United States Courts, bankruptcy filings rose by 16.8% for individuals (uscourts.gov). When dealing with the decision to file bankruptcy, it can often feel like the walls are closing in. It is easy to feel alone when facing a difficult decision like bankruptcy. There is no shame in filing for bankruptcy. A variety of situations in life can result in bankruptcy from medical debt to inflation to divorce. The reality is that in the United States 434,064 people filed bankruptcy in the year 2023.
Call us to Talk about it
If a bankruptcy is something you have been considering, Martin L. Rogalski, P.C. has handled numerous bankruptcies with a variety of variables and issues. Our trained staff is ready to answer more questions and guide you through. Contact us today.
