DON’T BUY IN TO THESE 4 MYTHS
March 15, 2016
Buying in to some common myths about credit and debt can be seriously costly. To help you avoid being misguided into the traps associated with these myths, below, we have debunked some common and costly misconceptions about debt and credit.
Whenever you are ready for specific advice regarding your debt situation – and how to resolve it, simply contact a Denver bankruptcy attorney at Garcia & Gonzales, P.C.
Myth 1 – The best way to avoid credit and debt problems is to not have any credit cards.
Fact – This is not necessarily true. While not having credit cards may be helpful when it comes to not overspending, maintaining credit cards in the right way is one pivotal way of establishing good credit.
Additionally, it’s important to remember that credit card debt is not the only type of debt that can be accumulated (mortgage debt, medical bill debt, tax debt and student loan debt are just a handful of examples of other types of debt that can be racked up). So, not having credit cards does not necessarily mean that you will avoid accumulating debt; it does, however, generally mean that you are limiting your options for building and maintaining good credit.
Myth 2 – Carrying a balance on my credit cards can boost my credit score.
Fact – Wrong! Carrying a balance on credit cards month to month will hurt your credit. Generally, it’s advised that, when possible, credit card balances are paid in full (each month) to work towards optimal credit.
Myth 3 – There’s nothing I can do when creditors threaten to sue me or garnish my wages due to unpaid debt.
Fact – Wrong again! If creditors are contacting you and threatening to take action against you (like by suing you, garnishing your wages, repossessing assets and/or foreclosing on your home), you may have a few options for halting these actions and maintaining the asset(s) in question.
For example, one option can be to file for bankruptcy, which will immediately stop creditors from moving forward with punitive actions. That’s because, when someone files for bankruptcy, an automatic stay takes effect. The automatic stay is essentially a court order that halts any planned or impending actions against debtors while the figure out how to resolve serious debt issues.
One reason for this court order is to prevent any one creditor from coming in and taking all or the majority of assets (leaving nothing or minimal assets for other creditors owed money).
Myth 4 – If I know I’m going to file for bankruptcy, it’s OK for me to run up charges on my credit cards (because that debt will eventually be discharged).
Fact – Not true! If you know that you will be filing for bankruptcy, running up charges on your credit card can constitute fraud. This is because credit card companies can argue that you had no intention of ever repaying the debt (because you were operating under the assumption that debt would be discharged via your future bankruptcy case).
If the court agrees that fraud was committed, what will likely occur is that:
The debt will not be eligible to be discharged.
The entire bankruptcy case can be dismissed.
Formal criminal fraud charges may be filed.
Need More Answers & Advice Regarding Your Debt Issues? Contact a Denver Bankruptcy Attorney at Garcia & Gonzales, P.C.
Are you looking for real relief from serious debt? If so, you can trust the experienced Denver bankruptcy attorney at Garcia & Gonzales, P.C. to provide you with experienced help and honest answers about your best debt relief options.
Contact us today by calling or by emailing us using the contact form at the bottom of this page. When you contact us, you will communicate directly with one of our attorneys, not a paralegal or legal assistant. We welcome Spanish-speaking individuals to contact us also – hablamos Español.