Misinformation is a powerful tool. When people base their decisions on misinformation, they may be making a choice that hurts them instead of helping them. This is especially true for bankruptcy. Bankruptcy can do a lot for an applicant in terms of freeing them from financial hardship, but there are many myths about bankruptcy that people still believe.
Bankruptcy has helped more than 750,000 people take back control of their lives last year. With so many people experiencing the benefits of bankruptcy, is it as bad as you think it is? Here are some myths that you should know are not true about bankruptcy:
Bankruptcy will take everything from me
There is a common misconception about what the cost of bankruptcy is. Depending on the type of bankruptcy you choose, you may not have to lose anything. Chapter 7 bankruptcy only calls for an applicant to sell nonessential assets, like a second home or car, to discharge the debt. No form of bankruptcy takes everything from an applicant.
Bankruptcy will ruin my credit score forever
While it is true that bankruptcy may lower your credit score, it certainly is not permanent. In some cases, bankruptcy applicants can boost their credit scores well into the 600s in only a few months. It is entirely possible to have a credit score that is as good as what you had before bankruptcy, or better, in the months after filing for bankruptcy.
All of my debts will disappear, including home and car loans
Bankruptcy commonly only discharges unsecured debts. These are a type of debt that does not have any collateral attached to it, such as credit card debt, medical debt, or personal loans. Other debts like home or car loans or student loans do not disappear as easily. Child support and alimony also stay throughout bankruptcy.
It is better to pay off my debts
In some cases, it can take years to pay off the debt you have and cost thousands of dollars more than the amount you initially owed. Bankruptcy can help you settle debts in a matter of months, while also giving you the opportunity for a bright future free from financial hardship. Some applicants file for bankruptcy because they know that they can never handle all of the debt they have.
Bankruptcy means I am a failure
No matter how good you are with your money, there are some things that people cannot prepare for. Sudden hardships like medical debt, divorce, and job loss can leave a person with more debt than they can deal with. Bankruptcy offers a solution to there unplanned problems and a clean slate for their future. Finally for bankruptcy is not a sign of failure, but rather, a sign of growth and coming success.