Filing for bankruptcy can be a viable way to resolve serious debt. Believing certain myths about bankruptcy, however, can prevent people from realizing when bankruptcy may be their best debt relief option – and that can end up triggering worse financial issues that may lead to wage garnishments, foreclosures, repossessions and possibly even creditor lawsuits.
To clarify some of the benefits of Colorado bankruptcy, the following dispels some common and costly myths about this debt relief option.
While the following information is essential for anyone in Colorado who is struggling with significant debt, you are encouraged to contact Kinnaird & Kinnaird’s bankruptcy lawyers in Colorado Springs for honest answers specific to you and your situation.
At Kinnaird & Kinnaird, P.C., our mission is to identify and move forward with a debt relief solution that works for you, both personally and financially.
Bankruptcy Myths Debunked
Myth 1: I will lose my house if I file for bankruptcy.
Fact: This is not necessarily true, as many people who file for bankruptcy in Colorado are able to keep their homes. This is because, in Colorado bankruptcy, there are certain exemptions – including a homestead exemption – that allows people to retain their homes through the bankruptcy process (so long as the value of the home/property does not exceed the exemption limit).
More specifically, the Colorado homestead exemption permits bankruptcy petitioners to exempt up to $60,000 of property value (or up to $90,000 if the individual, his/her spouse or his/her dependent is disabled or older than 60) from the bankruptcy estate.
- The bottom line: Don’t assume that you will automatically have to forfeit your home in bankruptcy. There may be various options for retaining it (or at least some of its value) through a bankruptcy case.
Myth 2: Filing for bankruptcy will ruin my credit forever.
Fact: This is also not necessarily true, as many people who file for bankruptcy are able to turn their finances around and start building better credit shortly after their case is resolved.
In fact, while bankruptcy can have some impacts on people’s credit, what is more important to understand is that:
- People’s credit may already be suffering substantially – before the bankruptcy case – due to unpaid bills and other debt issues.
- What bankruptcy petitioners do in the months following their case can be pivotal to rebuilding credit after bankruptcy. For instance, carefully managing credit card spending and paying off monthly credit charges in full are two ways to start rebuilding credit after bankruptcy.
- The bottom line: Filing for bankruptcy can be the first step in achieving a financial fresh start and putting you on the path to better credit – and a better overall financial outlook.
Myth 3: Debt consolidation is a better option than bankruptcy.
Fact: Not necessarily, especially for people who are having real difficulties paying their bills. This is because, with debt consolidation loans, people can be on the hook for paying a single bill every month – and missing even just one of these payments can lead to snowballing interest rates and no real relief from debt.
- The bottom line: If you are considering debt consolidation versus bankruptcy, it’s important to talk to a debt relief professional – like our bankruptcy lawyers in Colorado Springs – to find out which option will better serve your interests.
Contact Trusted Bankruptcy Lawyers in Colorado Springs
When you need experienced help resolving serious debt issues, contact our bankruptcy lawyers in Colorado Springs by calling (719) 520-0003 or by emailing us via the contact form on this page.
Applying decades of experience to every case we handle, the trusted attorneys at Kinnaird & Kinnaird PC are a close-knit, collaborative group who can help you protect your interests while helping you obtain real relief from debt.
From offices based in Colorado Springs, we provide the highest quality legal services to people throughout El Paso County and the state of Colorado.