Bankruptcy may not only be an overwhelming struggle to face but also an embarrassing one due to misconceptions concerning the process. You may have determined if it's right for you to file for bankruptcy but are hesitant to follow through. Dispelling the following myths about bankruptcy will help you make wise decisions for your financial future.

Bankruptcy eliminates all debt

It would be wonderful if all your debt could be gone, but the truth is that certain debts will remain. These include the following:

  • Child support
  • Alimony
  • Criminal restitution
  • Student loans
  • Tax debts
It's possible that bankruptcy court will discharge private student loans due to the Fairness for Struggling Students Act. You can eliminate other student loans outside of the bankruptcy process if you can prove a hardship that would prevent you from being able to pay them off, such as a permanent disability.

Furthermore, bankruptcy comes with fees. The type of bankruptcy you file for also has financial consequences. Although Chapter 7 dissolves most debt, you could be at risk of losing property. Chapter 13 requires you to live within a tight budget so you can make monthly payments, though the amount is reduced. Running up a large credit card bill before filing, with the assumption you won't have to pay, is fraud, and you will have to pay the debt.

Bankruptcy happens because of financial irresponsibility

The majority of bankruptcy cases are not from big spending or financial cluelessness, as you may think. The most likely causes are long-term unemployment, illness and divorce. These circumstances are often unexpected and prolonged, leading to a quick buildup of bills without sufficient income to pay them. As of October 2016, 25.2 percent of unemployed people have been jobless for more than six months, according to the Bureau of Labor Statistics. When the reason for unemployment is serious health issues, debt increases and bankruptcy becomes even more likely.

Bankruptcy ruins your credit permanently

Don't despair if you are faced with bankruptcy; your credit will not remain harmed forever. If you take the proper steps before and after filing, you can rebuild your credit quickly. Sta rt with using a secured credit card and making timely payments. You should be able to change to a regular credit card within a year as long as you continue to pay bills on time. Depending on your situation, you may even qualify for a mortgage in as little as two years. The best way to ensure a smooth bankruptcy process and re-establishment of credit is to utilize an experienced legal team that can help you make the best choices for your circumstances.