Who knows what about Chapter 7 bankruptcy?

While it may be true that most people living in Broward County, Florida, have a general understanding of what bankruptcy is, many may not be clear about what the actual process involves and accomplishes. That is why it can be very helpful to address common questions and misconceptions about Chapter 7 bankruptcy. The findings of a recent study explore the opinions and doubts Americans have about the popular form of bankruptcy.

There are several things that filing for Chapter 7 bankruptcy can accomplish. For instance, personal debts like loans, unpaid utility bills and medical expenses can be eliminated through bankruptcy. And while one recent study confirmed that approximately 1/3 of American adults understand that bankruptcy does not discharge unpaid child support payments, more than 70 percent of people mistakenly think bankruptcy can eliminate alimony debt. Similarly, the majority of people are unaware that student loans are not typically discharged in bankruptcy either.

When considering the benefits of filing for Chapter 7, more than half of people questioned in the survey claimed that bankruptcy offers the opportunity to start fresh financially. And while many subjects agreed that bankruptcy is another effective way to avoid foreclosure, more than 40 percent also claimed that bankruptcy can help to eliminate personal debt.

On the other hand, the people questioned in the survey also had reasons for why they believe filing for bankruptcy can present other issues. For instance, the majority of subjects may not necessarily be concerned about the stigma of bankruptcy but see the fact that bankruptcy can damage one’s credit score as a major reason not to file. And almost half of subjects didn’t like the idea that filing for bankruptcy can limit an individual’s business prospects.

Source: Sacramento Bee, “Only A Quarter (26%) Find Bankruptcy Shameful: More Worried About Credit Rating,” Yougov, Feb. 25, 2014