“I’ll never recover from bankruptcy!”
“Everyone will think I’ve committed a crime!”
“Lenders will never consider me if I choose to file!”
There are hundreds of judgmental opinions floating around about how to declare bankruptcy, who is eligible, and what happens after you file. Many of these myths are simply untruths perpetuated by creditors to discourage you from making a decision that doesn’t benefit their bottom line. But what if filing for bankruptcy is the best decision for you?
While declaring bankruptcy is a decision not to be taken lightly, sometimes it is your best (or only) option to escape the reality of crushing debt. If you’re considering filing for bankruptcy, let’s debunk a few common myths surrounding the legal procedure with the disproving facts that will ease your mind.
Myth #1: Your Credit Score Will Be Irreparably Damaged
This myth is one of the biggest falsehoods about bankruptcy. After filing for bankruptcy, you will see a hit on your credit report and the filing can be on your record for 7-10 years. The good news is, the second your filing is over you can begin to rebuild your credit score.
There are many ways to boost your credit score and rebuild your life after bankruptcy. Depending on your level of debt, some individuals may even see an increase in their credit rating just by filing for bankruptcy.
Myth #2: You’ll Never Be Successful Again
Just because you file for bankruptcy doesn’t mean your life is over! Many successful individuals file for bankruptcy and go on to rebuild very successful careers and businesses.
Did you know that Walt Disney filed for bankruptcy when he was younger and went on to build an empire worth $98 billion dollars? Even frugal living mogul Dave Ramsey filed for bankruptcy and went on to create a business that helps others stay out of debt.
Myth #3: There’s Never A Good Reason To Declare Bankruptcy
Following the Great Recession of 2008, bankruptcy declarations were at a high in the United States, and experts fear another spike in the wake of the Covid-19 pandemic. Many choose bankruptcy when faced with economic disaster, and you shouldn’t be shamed out of making a choice that could potentially be beneficial for your family and your livelihood.
While choosing to declare bankruptcy is by no means a “get out of jail free” card, filing for bankruptcy can sometimes be your best option. When your savings is depleted and you’re experiencing debilitating levels of debt, declaring bankruptcy can give you a clean slate and a better future.
Myth #4: Filing Bankruptcy Is Hard And Can Take Years
False! Filing for bankruptcy is not as hard as you think it is, especially with the counsel of a good bankruptcy lawyer. Thanks to modern technology, much of the paperwork is filed online and processed faster than in previous years.
The most common form of personal bankruptcy is called Chapter 7 and is usually completed within 6 months. In 2017 alone, nearly 500,000 Americans filed for Chapter 7 bankruptcy, according to the United States Courts consumer filings, and were well on their way to rebuilding their financial future once the process ended. The same can happen for you as well.
Myth #5: After You File, Your Creditors Can Still Sue
This is not true. One of the main benefits of filing for bankruptcy is it ceases all debt collection and your lenders will no longer be able to call, write, or sue you. If you’re filing for Chapter 7 or 13 bankruptcy, you are protected by the court against all creditors by a process called the “automatic stay.” According to federal law, you cannot be billed and you are protected from lawsuits.
Myth #6: Most Don’t Qualify To File For Bankruptcy
Also false! Creditors and debt collectors want you to think that most people don’t qualify for bankruptcy so you won’t try to contact a lawyer. In reality, many qualify for personal bankruptcy since the laws changed in 2005. If you’re wondering if you qualify for Chapter 7 bankruptcy, contact a law professional to explore your options.
Be sure to consider all options before filing for bankruptcy, but don’t be led astray by myths that prevent you from making the decision that is best for your family and future! If you’re inundated by calls from debt collectors with no way out, contact a bankruptcy lawyer today to discuss your next steps.