There’s a stigma and many misconceptions that surround filing for bankruptcy. At Mishra X Trial Lawyers, we want to help quash these misconceptions by providing you with accurate information as your bankruptcy legal representation in Southern California. Keep reading to learn more about six common misconceptions surrounding bankruptcy.

Misconception #1: You have to be completely broke

You don’t have to be scraping by from paycheck to paycheck to qualify for bankruptcy. Filing for bankruptcy is not a solution to not having money, it’s a resolution for crippling debt. This can include individuals from many different backgrounds, income levels, and occupations. Whether you file Chapter 7, Chapter 11, or Chapter 13 bankruptcy depends on your personal financial situation.

Misconception #2: Your credit can't recover

Yes, your credit score will take a hit when you file for bankruptcy. However, if you’re in a place where you’re ready to file, it’s probably not the best, to begin with. With bankruptcy, you can put together a plan to recover your credit score and some have increased their score from “good” to “excellent” as quickly as two years after their debt discharge. The rate at which you recover depends on the plan you have to recover as well as your ability to execute it.

Misconception #3: You will lose everything

When filing for bankruptcy, there are certain assets that you might have to give up that can include a car or some of the equity in your home. But it would be counterproductive of the courts to take everything you own and put you out on the streets because then you have bigger problems at hand. You’ll be able to keep most of your assets as exemptions to filing for bankruptcy. It’s important to have strong bankruptcy legal representation to help you identify those exemptions.

Misconception #4: You can never borrow money again

While some lenders might frown upon bankruptcy, they can also see the steps that you’ve taken to improve your credit score since then. Once you file for bankruptcy you’re not going to be blocked from borrowing money ever again. You will still qualify for mortgages, auto loans, and even business loans.

Misconception #5: Bankruptcy is the first step to financial freedom

If you feel like you’re buried in a mountain of debt, bankruptcy can be an appealing option because you feel that your debt discharge will make everything disappear. While a debt discharge can take the majority of that weight off your shoulders, it’s important to understand that not all of your debts will go away with a discharge. You will still have to pay off certain lenders who weren’t included in your discharge. Debts that are non-dischargeable can include tax debts and private and federal student loans, so it’s important to be aware of the debts that you have that will still be around after bankruptcy. A bankruptcy lawyer can help you identify these debts.

Misconception #6: You have to go through bankruptcy alone

This misconception is absolutely false because the team at Mishra X Trial Lawyers will be by your side the whole way. We’re experienced in serving as bankruptcy legal representation in Southern California and will provide you with the necessary guidance through the entire process. Reach out to our team today by calling 949-343-9735 or send a message via our contact form. We’re ready to fight on your behalf.