In the U.S., your financial credibility is all about your credit report and credit scores. Yet, if you are submerged in debt, and the loan sharks are after you, you might have no option except to file bankruptcy. In such cases, your credit score might plummet even further than where it is currently. And the worst part is that it is almost near impossible to get credit immediately after bankruptcy.
Most of us are under the impression that filing bankruptcy is inviting a certain doom. Others look at us with shame and think we are financially irresponsible. Banks and loan sharks chase us as if we are trying to escape to avoid paying the bills. And credit card companies do not approve any loans in bankruptcy. Is there no way out of this bankruptcy process?
Dispel your doubts by reading about the myths about bankruptcy below.
Myth 1: Bankruptcy will damage my credit scores forever.
If you have any outstanding debts like student loans, medical bills, mortgage loans, etc., they would have already affected your credit score.
All that happens during bankruptcy filing is that this will be reflected in your credit report for 7-10 years.
By filing for bankruptcy, you may be able to write off the debts.
Bankruptcy allows you to rebuild your career and life by eliminating your debts. All you need is to engage an expert law firm where bankruptcy attorneys will guide you through the entire bankruptcy process.
Myth 2: Bankruptcy eats up all my life savings, like retirement plans and home equity. I should use it only as a last resort.
Bankruptcy laws protect your investments. You do not have to use your life savings or nest egg to pay off your debts.
With the guidance of an experienced bankruptcy attorney, you can protect your personal assets and eliminate debts. The bankruptcy lawyer helps you save your properties during bankruptcy with proper planning.
Myth 3: Bankruptcy leaves me homeless and on the streets.
Life is not a movie, and bankruptcy is not the devil. It does not strip you and leave you naked on the streets.
You can still retain your home or belongings while undergoing the bankruptcy procedure.
If you file for Chapter 7 Bankruptcy, you can still stay in your home and retain basic amenities like furniture, clothing, etc.
If you have a family heirloom that you wish to hold on to even during bankruptcy, file for Chapter 13 bankruptcy or a wage earner’s plan. This helps you to pay off your debts within 3 to 5 years while holding on to your assets.
Clearing off debt in bankruptcy is possible, provided you choose the right chapter of bankruptcy. To do this, you need an experienced bankruptcy lawyer to help you gain debt relief even while in bankruptcy.
Myth 4: If I have a job, I cannot file for bankruptcy. Filing Bankruptcy will get me demoted or lose my job.
Having a job does not make you relinquish your right to file for bankruptcy.
You are in no danger of losing your job or getting a demotion due to your bankruptcy filing. If your employers expel you on account of bankruptcy, you can file a legal discrimination case against them. Here again, you will need the legal service of an able bankruptcy attorney.
Your employment and income will only determine which chapter of bankruptcy you can file for, like Chapter 7 or Chapter 13.
Myth 5: I will be debt-free after filing for bankruptcy.
A bankruptcy filing will not dissolve all your debts.
Bankruptcy does not absolve debts like student loans, tax debts, etc. If you are divorced, you will still have to pay for your ex-spouse’s alimony and child support.
Even if you file for Chapter 7 bankruptcy, you must pay secured debts like home or vehicle mortgages. If you do not pay your home loans, your home will still be at risk of foreclosure. Consult a seasoned bankruptcy lawyer who will help you get maximum bankruptcy relief for your debts.
Myth 6: I cannot get credit after bankruptcy.
It’s true that you can obtain credit card loans only with a good credit score and that credit scores crash with bankruptcy. Yet, other options are secured credit cards, which operate based on collateral or cash deposit. You can use this to get credit even after bankruptcy.
If you want to retain your secured credit card even while in bankruptcy, you must follow these steps:
- You must make your secured card bills on time.
- You must sign a reaffirmation agreement that promises to pay the secured credit card payments after bankruptcy.
- When you file for Chapter 7 bankruptcy, you must complete a Statement of Intention. This will list all your secured debts. It will also indicate whether you wish to retain or use the collateral to settle part of the debts.
All these processes need the help of an expert bankruptcy lawyer to get you the best bankruptcy protection against your credit card debts.
Myth 7: I can file for bankruptcy only once.
You can file for bankruptcy any number of times, as there is no limit. All you need is a time interval of 8 years between filing your bankruptcy claims.
People who file for bankruptcy are not irresponsible. They have let their finances spiral out of control for one reason or another. Bankruptcy filing is an acceptable recourse for people who need help in debt settlements.
Filing for bankruptcy is a life-changing decision that can give you immediate relief from your financial situation. Get a free consultation with a quality bankruptcy lawyer to help you make the right decision about your finances.