We all have at least one friend or one family member that focuses on the negative aspects in every situation. The worst part is, these are generally the least educated people when it comes to whatever the topic may be. The topic of bankruptcy is no exception. If you’ve discussed the idea of bankruptcy with other people, it would probably be safe to say there’s at least one person out there that has told you not to do it. Some people get downright mad when you mention the idea to them. Well, unfortunately, the stigma surrounding bankruptcy is the cause of such haste. If you take the time to learn about the relief bankruptcy can provide, you can most certainly debunk whatever the naysayer’s concerns may be. Here are four common misconceptions and the reasons why they’re not entirely true:
My Credit Score Will be Wrecked Forever - FALSE
Filing bankruptcy does have an impact on your credit score. After all, your liability on past debts is being discharged. However, the overall impact on your credit score is often times only temporary. Chances are your credit score has been on the decline for a while and has already noticed the impact of the overwhelming debt. Although bankruptcy will appear on your credit report for ten years after filing, you are given a clean slate to rebuild your credit to achieve the credit score you want. It is not uncommon for individuals who have filed to be able to get a credit card, line of credit, or vehicle loan within six months of receiving their bankruptcy discharge. Of course, interest rates are not ideal this early after filing, but in time you could be back to having a 700+ credit score. Despite the temporary impact bankruptcy can have on your credit score, you have to think of the benefits bankruptcy can provide. If you choose to maintain your credit score where it is and struggle financially, ultimately that’s up to you. On the other hand, you could potentially place yourself in a much better position financially by filing for bankruptcy and take the time necessary to rebuild your credit.
I’m Going to Lose My House/Car - FALSE
Among the many misconceptions surrounding bankruptcy, this is one of the more prevalent ones. Generally speaking, the only way you will lose your house or car through bankruptcy is if you stop making your payments on them. If your house or car are paid off, there are ways to make sure they are protected. We understand the concern about losing a house or car through bankruptcy, but that certainly will not happen so long as you keep making your payments, on time, every month. And, if the house or car are paid off, we have the ability to make sure nothing happens to them. In some instances, creditors will ask you to reaffirm certain debts if you wish to keep the property after filing your bankruptcy. All this means is that you are agreeing to remain liable for the debt after the bankruptcy is finalized. We can talk about your options at any time if you have questions.
Everyone Will Know I Filed Bankruptcy – FALSE
Most people will never know you filed for bankruptcy unless you tell them. Of the people that may find out about your bankruptcy, the following are a certainty: your attorney, the bankruptcy Trustee who oversees your case, other legal professionals, current/future creditors, and others you grant permission to run your credit report. Unless you tell family and friends, they will likely have no idea. Now, if you have family or friends that are co-debtors with you, it is conceivable they will find out. Strangers will likely have no idea, and if they do, who cares. Your bankruptcy case filing is a matter of public record, but it usually takes a considerable amount of work to obtain the information associated with your case. The fact you file bankruptcy will never be openly displayed by us or any of the other legal professional in our office. So, if you don’t want family or friends to know, the best plan of attack is to keep it to yourself. The decision to file bankruptcy is a personal one. Only you can decide whether or not it’s the best decision for you. If other people knowing about your bankruptcy is a concern of yours, feel free to talk to us about it. Any conversations we have with you will be held in strict confidence.
I Don’t Have Enough Debt to File Bankruptcy -maybe True or Maybe False
There is no specified amount of debt necessary to qualify for bankruptcy. The question generally comes down to whether or not you have the means to pay your bills and provide for your family. Amount of debt and ability to pay is relative to the individual. $10,000 worth of debt to one person is not the same as $10,000 worth of debt to another. Determining whether or not you should file for bankruptcy based on your overall debt takes consideration. However, if you’re struggling to pay your debts, care for your family, and there’s no end in sight, it would be worthwhile to sign up for a free consultation. If filing for bankruptcy is not the right decision, we will certainly let you know. However, if filing for bankruptcy is the right decision, we will let you know and we will walk you through the process to getting your life back.
There are many misconceptions about bankruptcy. This is primarily because of the stigma society has placed on bankruptcy. If you decide to sign up for a free consultation with us, we will let you know what your legal rights are and we will provide you with the best advice to handling the situation you’re confronted with. Most readers of this blog have been dealing with the stress associated with debt for quite some time. If you’re one of them, feel free to give one of our 8 professional and convenient MN locations a call. We’re here for you and would love to help.