People say that knowledge is power, and when you understand how certain systems work, you can use them for your own benefit. Misinformation, on the other hand, could prevent people from taking the right steps to protect themselves.
There is plenty of confusing or inaccurate information floating around about bankruptcy. If you believe any of the myths listed below, you might want to rethink your objections to filing for bankruptcy, as it could be the solution you need for your unsecured debts.
You will permanently destroy your credit
There is no question that filing for bankruptcy will drag down your credit score. You may see your score drop by as much as 200 points immediately after you file. However, having one blemish on your credit report from bankruptcy will do less damage to your credit score than multiple past-due lines of credit and judgments. You will be surprised to see how quickly your credit begins to recover after your discharge since you are eliminating debt.
Additionally, even the record of your bankruptcy discharge will eventually come off of your credit report. You can expect all formal records of your bankruptcy to go away 10 years after your Chapter 7 discharge or seven years after your Chapter 13 discharge.
You will lose all of your property or your home
Not every bankruptcy requires property liquidation. Those who file for Chapter 13 bankruptcy won’t have to give up any of their assets at all.
Even those who file for Chapter 7 bankruptcy can exempt some of their property from the liquidation requirements. You may be able to protect the equity in your home, furniture, a vehicle or retirement savings in a Chapter 7 bankruptcy filing.
You will face serious social stigma over a bankruptcy
While it is true that employers will review your credit report for blemishes before hiring or promoting you, not every company does so. Although there may be some limitations on your options for renting a place to live or obtaining the best jobs out there right after you file, those limitations will go away when your bankruptcy comes off of your credit report.
Most people will never even know that you filed for bankruptcy unless you notify them of that directly. In other words, you don’t have to worry about social stigma because the average person will have no idea that you ever required the protection of bankruptcy.
Learning the basics of bankruptcy can help you feel empowered to take control of your finances.