Three Biggest Myths about How Bankruptcy Affects the Debtor’s Financial Future

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Even today, many people are discouraged from taking advantage of the best debt relief option available to them due to misconceptions about bankruptcy. People put a lot of stock in their creditworthiness for many financial matters, which is why it’s understandable that they are not willing to risk damaging their credit score. In some cases bankruptcy may be the ideal course of action, but the fear of having an inadequate credit score may leave one paralyzed.

What people don’t realize is that not everything they hear about the aftermath of bankruptcy should be taken as facts.

Credit Score Doesn’t Increase Until After the Bankruptcy

Any experienced bankruptcy lawyer will assure you that this is simply not the case. You can work to improve your credit score as you build up your credit again. Treat bankruptcy as a new start. If you keep up with your payments and make smart credit or financial decisions you can be back in good standing in a little less than four to five years. Creditors and lenders may still see the filing on your history, but they would be more willing to let it slide if you are showing initiative to rebuild your credit.

You Will Lose Everything When You File for Bankruptcy

For some reason, when people think of bankruptcy, the image of getting driven away from their home and giving up their possessions comes to mind. In truth, people go through bankruptcy with most of their assets and properties intact. Chapter 13 allows you to pay off your creditors through a repayment plan that can be easily managed. Even if you opt for Chapter 7, there is a huge possibility that your case will be a no-asset case, meaning that you don’t have to give up anything essential to your day-to-day life. Just be sure to discuss what assets are considered “exemptions” with your lawyer.

Everyone Will Know That You Declared Bankruptcy

It’s true that bankruptcy is a matter of public record, but that doesn’t mean that everyone will know the moment you file. Unless you tell them yourself or someone (say, a future lender or creditor) is specifically tracking down your financial information, nobody will be privy to that knowledge. The sheer number of filings that are processed in your state alone will deter almost anyone from digging.

Learning more about bankruptcy and how it can affect you will help you make an informed decision. Have an honest discussion with your lawyer so you know exactly what to expect. Call Weik Law Office today at 919-845-7877 for a free consultation, and set up a time to speak with one of our professionals.