When you hear the word “bankruptcy,” what comes to mind? Your first thought is probably something negative, like someone starting a business that had no chance of success. More likely, you think of someone being irresponsible with their money and losing everything because of it. You’re not the only person who thinks about bankruptcy that way, but all of these thoughts are misleading about what bankruptcy means.
Take it from a Minnesota bankruptcy lawyer: most people think bankruptcy myths are true. At Kain + Henehan, we help clients overcome their thoughts about how bankruptcy is terrible and take steps to get their financial lives in order. If you are struggling financially and need a way out, you should learn more about what bankruptcy means before writing it off entirely.
What is Bankruptcy?
Bankruptcy is a legal process to help you get out of debt by discharging unsecured debts (like credit card debt) and managing payments for secured debt (i.e. mortgages and car loans). Different types of bankruptcy help you in slightly different ways. However, all forms of bankruptcy help you start your financial life over debt-free.
Bankruptcy Myths 1: Only Irresponsible People End Up In Bankruptcy
It’s easy to believe that you must have done something wrong to end up in bankruptcy. The truth is that anyone can end up in bankruptcy at any time because of unfortunate circumstances.
An example of this is medical debt. If you have other debts and need emergency surgery, your debt can increase so that the payments are more than you earn in a month. Your debts outpace your earnings so you can’t possibly keep making payments.
This is where bankruptcy can help. Bankruptcy can help discharge your other debts so that you can afford to make payments on debts that cannot be discharged, like your mortgage. Through no fault of your own, you ended up in a situation where bankruptcy was the best option. Unfortunately, this happens to people often.
Bankruptcy Myths 2: I’ll Lose Everything If I File For Bankruptcy
The truth is that don’t lose anything in bankruptcy; you trade what you have available to discharge your debt. The process takes into account all of your available assets and finds the best way to pay off as much of your debt as possible. However, the way that you file bankruptcy determines if certain assets are protected or not. Your house and vehicle are usually protected so that you can continue to live your life. You may not have to trade anything if the bankruptcy court can find an effective payment plan and restructure your debt for you. It all depends on the situation.
Schedule a Consultation With a Minnesota Bankruptcy Lawyer
Don’t let myths about bankruptcy stop you from considering it if you are in dire financial straits. Start by learning more from a Minnesota bankruptcy lawyer about what bankruptcy is and how it can help you. You can even schedule a free consultation for more personalized advice on what to do next.
Contact Kain + Henehan by calling (612) 438-8006 or filling out the online form to learn more about bankruptcy and to schedule a free consultation. We work with clients every day who turned to bankruptcy for a second chance at a stronger financial future.