Even though the once struggling economy is slowly starting to pick up, many Tennessee consumers still struggle with debt. They may be unemployed, working only part time, or unable to pay off the mountain of credit card debt they owe, whether it be from medical expenses or poor financial choices. To obtain debt relief, many choose to file for bankruptcy. Bankruptcy is often seen as a cure-all, but is it really the right choice? Discover the myths - and the truth - behind the bankruptcy process.
First of all, bankruptcy does not always eliminate all debts. If a person is paying child support, alimony, student loans or fines brought about by criminal charges, bankruptcy will very likely not provide relief to those obligations. Those debts almost never disappear because of a bankruptcy filing.
It's possible for one spouse in a married couple to have more debt than the other. Therefore, if a person is married, the spouse does not have to automatically file for bankruptcy as well. However, if the goal is to eliminate the debt on joint credit cards or accounts, then both spouses will have to file.
One of the most common beliefs is that consumers will lose all their assets - or even their jobs - if they file for bankruptcy. Although some assets may be repossessed in the process, each state allows exemptions, so it's possible for consumers to keep their home or car under certain conditions. As far as their job goes, they should not worry. It is considered discrimination to fire an employee solely based on a bankruptcy filing, so if this happens, there is legal recourse available.
Each person's financial situation is different, so it's a good idea to look at all the options available before settling on bankruptcy. Bankruptcy offers many benefits, but it can damage an excellent credit score and make obtaining a loan difficult.
Source: Crown City News, "Column: Nonprofit Dispels 7 Common Myths about Consumer Bankruptcy," Anna Buss, Nov. 27, 2014