More than 1.2 million Americans will file for bankruptcy this year. Even though bankruptcy is not uncommon for residents of Texas, there are still common misconceptions about individuals who file for bankruptcy.
Some believe that those who file are financially irresponsible and cannot resist the desire to spend money on credit cards. In fact, many financially responsible Americans have filed for bankruptcy. The most common reasons for filing are far from irresponsible - they include:
- Divorce: Divorce can be financially devastating to both parties because of the expenses involved in running two separate households.
- Job loss: A recent report by the Bureau of Labor and Statistics shows that 5.2 million Americans have been unemployed for six months or longer. Because of the difficulty, expense and psychological stress associated with procuring new employment in a difficult economy, many are struggling to make ends meet month after month.
- Medical costs: The increasing cost of medical care exacerbates the situation for many average Americans. A recent survey from the Centers for Disease Control shows that about 20 percent of Americans had difficulty paying their medical bills in 2011.
Another common belief is that prior to filing bankruptcy, an individual can run up credit card bills and pile on more debt. This type of behavior is, in fact, considered bankruptcy fraud. Under the Bankruptcy Abuse Prevention and Consumer Protection Act, fraudulent debts cannot be discharged.
Many also believe that bankruptcy ruins an individual's ability to get credit. In reality, in as little as a month after filing, individuals may begin receiving offers from credit card companies. Often times, these cards are secured credit cards that require a deposit at the bank to secure the use of the card. Individuals who use these credit cards and make timely payments are often able to obtain a standard credit card after six to twelve months.
These common misconceptions can impede an individual in Dallas from investigating bankruptcy when, in many cases, it may be the right solution for an individual or family's current financial situation. If you are considering bankruptcy, do not let misconceptions prevent you from achieving financial freedom. Instead, speak with a bankruptcy lawyer about your options.
Source: U.S. News, "5 Bankruptcy Myths Debunked," Susan Johnston, May 14, 2012