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What are the myths about Tennessee bankruptcy?

Despite being a perfectly legitimate and honorable way to find Tennessee debt relief. One way of legally discharging debts is misunderstood by many people, including some Tennessee residents. Misconceptions about bankruptcy can prevent people from making an informed choice that could help them out of debt with comparative ease. Knowing the facts about bankruptcy can help.

Is bankruptcy only for people who are financially irresponsible? No. It is a myth that people who spend recklessly are the main ones who file for bankruptcy. Unexpected life changes, such as a death in the family, divorce, unemployment and serious illness can lead anyone who is responsible to acquire debt beyond his or her ability to pay. According to a 2011 survey by the Centers for Disease Control and Prevention, 20 percent of U.S. families had trouble paying medical expenses that followed from serious illness. For all of these reasons, it is unfair to assume that people who file for bankruptcy are financially irresponsible.

Will bankruptcy ruin someone's credit? Although credit scores can be affected by bankruptcy, obtaining credit after a filing is not impossible. Someone who has filed usually can obtain a secured credit card. This type of credit card requires a bank deposit and comes with a low credit limit.

Nonetheless, it offers a good way for someone to improve his or her credit standing. It is also a myth that bankruptcy filers can rack up large credit card bills because the debts are about to be discharged. Anyone who does this can face fraud charges.

Does bankruptcy discharge every debt? No. The process has limitations. Child and spousal support and restitution from a criminal offense are not included in bankruptcy filings. Some taxes can be discharged or reduced. For clarification, a bankruptcy filer should discuss this matter with a bankruptcy professional.

Source: Money.usnews.com, "5 Bankruptcy Myths Debunked," Susan Johnston, May 14, 2012

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Kenneth C. Rannick, P.C.
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