Bankruptcy Myths: Breaking Down Barriers to Build a Better Future
Bankruptcy is an admittedly complicated process, which unfortunately also gives way to a great deal of confusion. There are certain key myths surrounding bankruptcy, for example, that often make it seem like a much scarier proposition than it really is. Only by clearing up these myths will you begin to get a better idea of precisely what you're dealing with moving forward.
You Can't Get Credit
This one seems obvious, at least on the surface. If you declare bankruptcy, nobody will ever give you a credit card again, right? Not necessarily! In fact, you can usually expect to begin getting new credit card offers in the mail just a few short weeks after your bankruptcy is final.
Your credit score will also usually rise, not fall, because:
- Much or all of your debt is gone.
- You can't file bankruptcy again for several years.
- Your former and remaining debts are public record so your loan application is verifiable.
You Can't Buy a House
The reality of this myth is similar to the idea that you'll never be able to get credit again. Think about it from a lender's perspective - the fact that you are unable to discharge your mortgage for the next several years after filing bankruptcy actually makes you a "safer bet" in some ways than someone without bankruptcy on their credit history. This might not be true of every bank or financial institution, but your options will merely be eliminated - not eviscerated entirely.
Under present policy, Fannie Mae and Freddie Mac will buy your mortgage two years after a Chapter 7 bankruptcy or one year of timely payments in Chapter 13. Add one year to each if you were in foreclosure when you filed. In addition, the same factors in the previous section apply.
You're Going to Lose Everything
This myth is a popular one, but it's so deeply rooted in fiction that it's almost laughable. Actually, the vast majority of Chapter 7 bankruptcy cases are "no-asset" situations - meaning that the person declaring bankruptcy is about to lose exactly zero possessions. If you file for Chapter 13 bankruptcy you'll need to value all of your assets, but not because they're about to be taken away - because they're about to be factored into your repayment plan which protects assets in the bankruptcy estate 100% from seizure.
Now That You Know The Truth And Are Considering Bankruptcy As An Option, Please Schedule A FREE Consultation Below.