Student Loans and Bankruptcy

Three Myths You May Have Heard About Bankruptcy

29 December 2015

Roy Sanders

Unless you have filed for bankruptcy before, you may not quite understand all the rules surrounding it. Even if you have filed before, there are different types of bankruptcies with different obligations with each type. When it comes to filing bankruptcy, you want to make sure you have thought long and hard about your options. It is also important that you consult with a bankruptcy attorney before filing so you know exactly what you are dealing with and what repercussions could follow in the future. In an effort to get to the truth about bankruptcy, it is crucial that the myths you have heard are dispelled. Here are three myths you may have heard about filing for bankruptcy. 

A Married Couple Has to File Together

The law does not require that both you and your spouse have to file for bankruptcy together. There are situations where you will want to file for bankruptcy with your spouse and situations where it is better for only one of you to file. If majority of the debts are all in one person's name, then typically they should be the only one filing. If both of you share the debts, then it may be best for you both to file. There are both advantages and disadvantages to both options. If only one person files, that means all the debts fall on them. This can be bad if they are the ones responsible for paying back some of the debt; however, it can be advantageous when it hurts only one person's credit score. 

You Can Run Up Your Credit Cards Before Filing

A lot of people think that filing for bankruptcy removes all debts they owe. In return, they think they are able to run up debt right before filing and they will be cleared after the bankruptcy has been granted. Judges discourage anyone from running up debt on credit cards and taking out loans right before filing for bankruptcy. This can be considered fraud and a trustee of the court will know exactly what to look for when you try to do this before filing. If you must make some purchases, then you want to stick to only necessities. 

Lazy People File For Bankruptcy

Some people believe there is a stigma surrounding the type of people who file for bankruptcy, but there are tons of situations that could end up causing you to reach a low time in your life and force you to file. Medical issues that result in income loss and medical bills are one of the most common reasons for filing for bankruptcy. In fact, about 62.1% of people who filed for bankruptcy did so because of an illness or medical bill, according to a study conducted in 2007. You never know when you could be involved in an accident, get laid off from your job, or experience a major medical illness that changes your financial situation. Click here for more information on bankruptcy law.

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