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Bankruptcy Myths in Mississippi

Roberts Wilson, P.A. | October 28, 2022

When faced with the difficult decision of filing for Chapter 7 or Chapter 13, many debtors face an array of false bankruptcy myths in Mississippi. If you are considering filing for bankruptcy, you need to know the facts.

The Oxford bankruptcy lawyers at Roberts Wilson, P.A. can help you understand the truth about filing for Chapter 7 or Chapter 13 in Mississippi. It costs you nothing to discuss your situation with an attorney at our firm. Your initial consultation is completely free of cost and you are under no obligation to continue with our firm after your initial discussion.

Bankruptcy Myth # 1: Those Who File Bankruptcy Are Financially Irresponsible

FACT: Anyone–even the most financially responsible–can suffer financial setbacks. Many people who file bankruptcy have just gone through some of the most emotionally and financially challenging events in their lives. For example, spouses going through a divorce may struggle to manage running a household on single incomes while simultaneously facing tremendous debt. Perhaps someone just suffered a serious health issue or lost a loved one to a grave illness and is now burdened by exorbitant medical bills. In some cases, responsible people find themselves without a job for extended periods of time and are forced to rely on debt to manage basic daily expenses.

Filing bankruptcy is not the act of a financially irresponsible person. It is an informed choice made by someone who wants to address unexpected hardships responsibly. Individuals who file bankruptcy are usually good people who just need to get back on track.

The bankruptcy attorneys at Roberts Wilson, PA are proud to stand with our neighbors during their most difficult times. We know the circumstances and decisions that lead to filing for bankruptcy are not easy. We are here to help carry your burden and guide you through the process of getting the financial relief you deserve.

Bankruptcy Myth #2: Bankruptcy Eliminates All Debt

FACT: Most people file for bankruptcy with the hope of achieving a fresh financial start. While filing for bankruptcy does offer significant financial relief, it does not eliminate all types of debt. 

Some examples of debts that are not discharged in a Chapter 7 filing include:

  • Most student loans
  • Recent federal, state, and local taxes
  • Child support and spousal maintenance (alimony)
  • Debts resulting from personal injury or wrongful death damages from drunk driving cases
  • Non-dischargeable debts from a prior bankruptcy
  • Debts owed to certain pension plans
  • Government-imposed penalties, fines, and restitution
  • Court fees
  • Fraudulent debt

The list above is not exhaustive. This is just one of the reasons why it is so important to speak with a knowledgeable bankruptcy lawyer to discuss your rights and legal options. An attorney can explain how bankruptcy can help you and what debts may not be discharged.

Bankruptcy Myth #3: Filing Bankruptcy Will Ruin Your Credit Permanently

FACT: After filing for bankruptcy, your credit score will take a significant hit. This can make it difficult to obtain competitive rates on credit cards and loans for a period of time. However, while it may take time to rebuild your credit score after bankruptcy, you may be surprised by how quickly you’ll be able to do it. First, it’s important to keep up with payments for current loans and credit cards. 

Depending on your individual situation, it may also be a good idea to open a new line of credit to demonstrate that you can make on-time payments responsibly. But be aware that every time you apply for new credit, prospective lenders will pull your credit report, which can negatively affect your credit score. To avoid these credit-dinging inquiries, try to apply for credit lines you are confident that you can qualify for. You can also apply to get prequalified, which results in a “soft” pull of your credit.

When attempting to rebuild your credit after bankruptcy, consider applying for the following types of credit:

  • Secured credit cards
  • Credit builder loans
  • Being an authorized user on a credit card

Just because you filed for bankruptcy, it doesn’t mean that your credit will be permanently ruined. With some time and diligence, you may be able to enjoy a healthy credit score again.

Bankruptcy Myth #4: Money Spent Right Before Filing Can Be Absolved

FACT: Be wary of racking up new debt right before filing for bankruptcy. Unless it was for life necessities such as food, utilities, or clothing, avoid running up debt during the 70 to 90 days prior to filing bankruptcy. Creditors may argue that you took out a loan without any intention of paying it back. This is considered fraud.

As a general rule, luxury-item credit card purchases and cash advances that occur within 70 to 90 days of filing bankruptcy are considered “presumptive fraud.” Fraudulent debts will not be discharged.

Speak with Our North Mississippi Bankruptcy Lawyers for Free

Don’t let bankruptcy myths in Mississippi stop you from making the right decision. If you are considering filing bankruptcy, our North Mississippi bankruptcy lawyers can help you get a fresh start. We know what a difficult time this may be for you and your family. We are committed to helping you move forward with dignity.

Contact Roberts Wilson, P.A. today online or at (662) 533-9111 to discuss your situation for FREE. We proudly help our neighbors in Oxford, Holly Springs, Batesville, Pontotoc, Desoto & Tate counties, and other areas throughout Mississippi and beyond.