Filing for bankruptcy is extremely damaging to your credit and can result in a 200-point drop in your credit score. However, for those in desperate financial situations, bankruptcy is a final alternative to help them dispose of assets, discard or pay off debts, and obtain some financial relief. Myths about bankruptcy abound on the internet.
However, bankruptcy might be one of the best things you have ever done for your life, family, and future. While the name “bankruptcy” may appear terrifying, the concept that bankruptcy is something to be feared is, fortunately, a fallacy. Dealing with debt, creditors, litigation, and repossession is considerably more frightening than declaring bankruptcy and getting a fresh start. You can consult bankruptcy attorney Corey Mills for more information.
Here are some common myths regarding bankruptcy:
If I declare bankruptcy, everyone will find out.
This is not correct. You most likely have colleagues, coworkers, or even family members who have just filed for bankruptcy debt relief without telling anybody. In general, no one will find out until you tell them. Furthermore, federal rules are in place to prevent employees from being dismissed due to declaring bankruptcy.
I am going to lose everything.
This is arguably the most prevalent of all the bankruptcy misconceptions. Do not worry; you will not have to start from scratch. State and federal regulations safeguard most of your property, so you would not have to start again. Bankruptcies are put in place so that individuals may get back on their feet and be productive again, and it would be extremely difficult to do so if you had to start from scratch after filing. Your family and you will be safe.
If I file for bankruptcy, the court will seize all my possessions.
That is just false! In truth, most people who petition for bankruptcy debt relief do not lose anything. Our rules give significant exemptions that allow you to keep your house, car(s), and other valuable personal property.
Your credit will be ruined if you declare bankruptcy.
While bankruptcy will influence your credit score, it will not return you to zero. If you practice healthy credit habits, your credit will improve! Remember that your existing debts are already affecting your credit score. Therefore, the best way to improve it is to use bankruptcy to reset your financial habits and bring them back up.
I will never have a credit card or be approved for a mortgage again.
This is one of the most common, yet false, myths. After filing for bankruptcy debt relief, most customers receive credit card offers within months. Furthermore, debtors may be eligible for an FHA loan within one year of applying for bankruptcy debt relief!