There is no denying it, formally declaring the bankruptcy of your enterprise is going to be one of those financial decisions that you will find most difficult to make. We don’t blame you; going for it puts so much on the line for your business or personal finances. For one, the bankruptcy can be seen as an indicator that you failed.
Despite such negativity, declaring bankruptcy can be a very logical to do. It brings with it a number of benefits that you can maximize only if you understand what bankruptcy really means.
To help you with this, we present here three of the most common misconceptions about bankruptcy.
1. Declaring Bankruptcy Is Just An Unfair Means To Evade Responsibility, And It’s Quite Easy To Qualify For It
Those who don’t really understand how business finances work might think that business owners who wish to qualify for bankruptcy are just cowards who want to hide behind the protection of the law. This is not true. There are debts that cannot be subjected to an automatic stay even if someone is legally declared bankrupt. Child support and taxes are some examples of such liabilities. And just to be clear, all other debts are not going to be written off.
1. Declaring Bankruptcy Is Just An Unfair Means To Evade Responsibility, And It’s Quite Easy To Qualify For It
Those who don’t really understand how business finances work might think that business owners who wish to qualify for bankruptcy are just cowards who want to hide behind the protection of the law. This is not true. There are debts that cannot be subjected to an automatic stay even if someone is legally declared bankrupt. Child support and taxes are some examples of such liabilities. And just to be clear, all other debts are not going to be written off.
The automatic stay that the court grants only temporarily bars creditors from taking steps to collect payment. The debts are still going to be paid by monetizing the debtor’s assets, although there really is a chance that the creditors will only get a portion of the amount that they are owed.
As to the notion that it’s easy to file for bankruptcy, anyone who has been through the process will attest that this really is not the case. Congress has recently passed the Bankruptcy and Abuse Prevention and Consumer Protection Act (BAPCPA), a law that aims to stop anyone in North Carolina and elsewhere in the United States from taking unfair advantage of the affordances that the bankruptcy courts can provide.
Under this legal statute, anyone who wishes to qualify for bankruptcy will go through rigorous justification proceedings. Get in touch with a good Raleigh Chapter 7 Bankruptcy law firm to find out more about what transpires during such proceedings.
2. A Bankrupt Debtor’s Financial State Is Forever Doomed
It is true that a bankruptcy will be reflected on a person’s credit history for around seven to ten years. It’s a long time, but it certainly is not forever. Also, there are products that can help the person get back on the right financial track even immediately after the declaration of bankruptcy. Secured credit cards are good examples of such products.
Also, there have been reports that credit scores of some individuals actually improved just months after their bankruptcy cases have been finalized. Of course, this does not mean that they can immediately go back to normal. Their bankruptcy record will still bring some limitations.
3. Anyone Can Qualify For Bankruptcy Over And Over Again
Now, this is just not true. No individual is allowed to seek the legal remedies afforded by a bankruptcy declaration more than once in eight years (applicable to cases filed under Chapter 7). So, the decision to declare bankruptcy should be something that is well thought-out.
The Bottom Line On Bankruptcy
As to the notion that it’s easy to file for bankruptcy, anyone who has been through the process will attest that this really is not the case. Congress has recently passed the Bankruptcy and Abuse Prevention and Consumer Protection Act (BAPCPA), a law that aims to stop anyone in North Carolina and elsewhere in the United States from taking unfair advantage of the affordances that the bankruptcy courts can provide.
Under this legal statute, anyone who wishes to qualify for bankruptcy will go through rigorous justification proceedings. Get in touch with a good Raleigh Chapter 7 Bankruptcy law firm to find out more about what transpires during such proceedings.
2. A Bankrupt Debtor’s Financial State Is Forever Doomed
It is true that a bankruptcy will be reflected on a person’s credit history for around seven to ten years. It’s a long time, but it certainly is not forever. Also, there are products that can help the person get back on the right financial track even immediately after the declaration of bankruptcy. Secured credit cards are good examples of such products.
Also, there have been reports that credit scores of some individuals actually improved just months after their bankruptcy cases have been finalized. Of course, this does not mean that they can immediately go back to normal. Their bankruptcy record will still bring some limitations.
3. Anyone Can Qualify For Bankruptcy Over And Over Again
Now, this is just not true. No individual is allowed to seek the legal remedies afforded by a bankruptcy declaration more than once in eight years (applicable to cases filed under Chapter 7). So, the decision to declare bankruptcy should be something that is well thought-out.
The Bottom Line On Bankruptcy
Many people shy away from declaring bankruptcy because of its negative associations. But quite frankly, they should just let other people talk. If seeking this type of remedy is a step to financial recovery, then you shouldn’t even be having second thoughts.
I hope you enjoyed this blog post about the biggest lies about filing for bankruptcy and the details of Chapter 11 and Chapter 7 options.
Interested in more articles about credit and frugal finances?
Read Related Resources:
• How To Claw Your Way Out Of Credit Card Debt
• Why Are So Many Americans Living In Debt
I hope you enjoyed this blog post about the biggest lies about filing for bankruptcy and the details of Chapter 11 and Chapter 7 options.
Interested in more articles about credit and frugal finances?
Read Related Resources:
• How To Claw Your Way Out Of Credit Card Debt
• Why Are So Many Americans Living In Debt
More Bootstrap Business Blog Below
