Getting into financial difficulties can often drive a person to experience considerable hardships and other problems. Not surprisingly, individuals that are facing this type of problem will often need to look at the option of using bankruptcy protection to allow them to reset their financial situation.

Myth: Bankruptcy Is Always Due To A Person Making Reckless Financial Choices

A common belief that individuals will have about bankruptcy protection is that it is only a tool for those that make poor or otherwise reckless financial choices. However, individuals can easily find themselves falling into severe financial hardship and mounting debts through no fault of their own. One example of this can be medical debts, loss of employment or natural disaster-related losses. Regardless of the reason that a person is facing crushing debts, it can be an important option to review whether bankruptcy will be able to offer you protection.

Myth: It Will Be Cost Prohibitive To Pursue Bankruptcy Protection

While there will be some costs involved with pursuing bankruptcy, individuals should avoid letting these costs discourage them from pursuing bankruptcy protection. The benefits of having large amounts of debt forgiven or restructured can be worth the nominal court and attorney fees that will have to be paid. Additionally, there are some bankruptcy law services that will work with individuals by arranging a payment plan. This can be invaluable for those facing high debts that also have a limited cash flow.

Myth: All Bankruptcy Cases Will Have The Same Outcome

It is important to note that the type of outcome you can expect from the bankruptcy proceedings will depend on the particular type of bankruptcy protection that you pursue. For those that pursue a Chapter 7 bankruptcy, the bulk of their assets are likely to be liquidated so that the creditors can be repaid as much as possible. At the end of this process, the debts will be erased regardless of whether the debtor actually paid the full amount. In contrast, a Chapter 13 bankruptcy will allow a person to retain their assets, but it will involve the debts being renegotiated to lower payment amounts.

Bankruptcy protection can be a commonly misunderstood legal option for managing the debts that you may have accumulated. Unfortunately, individuals that are not familiar with the bankruptcy process can be far more likely to be influenced by myths and other misinformation. After having these notions corrected, making smart choices for your financial future will be easier when it comes to filing for bankruptcy protection. Reach out to a bankruptcy lawyer for more information.