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Every year, millions of Americans file for bankruptcy protection. Despite the fact that it’s fairly common, dozens of myths still exist about this legal financial solution.
In part, we can thank credit card companies for that. They have a vested interest in keeping people out of bankruptcy and so just love to spread disinformation about it. Here are some things to consider before you decide to keep toughing out your debt.
“Bankruptcy will tank my credit score.”
Our credit reports seem to touch every aspect of our lives, sometimes to a downright unreasonable degree. So it’s natural to be worried about what bankruptcy will do to the all-important credit score. Often organizations check the score without even bothering to look at the attached report.
It’s true bankruptcy will remain on your credit report for a long time: 10 years for a Chapter 7, 7 years for a Chapter 13. But your score is likely to go up. That’s because all your delinquent accounts go away. Your debt-to-income ratio goes down. There are no longer any items in collections.
It makes a huge difference.
“I’ll never get credit ever again.”
Prepare to be shocked, because the moment you get your discharge you’re going to be drowning in offers for new credit cards and car loans.
Sure, they’re going to be high-interest credit cards and car loans. Some of those cards might be secured cards. And it may not be advantageous to jump right back into debt, especially credit card debt, with both feet. Especially since the main reason you’re getting the offer is they know you won’t be able to declare bankruptcy for many, many years, which means they’re going to get their money.
But if you really need a car loan, you can easily get one. Here in St. Louis there are multiple banks and dealerships ready and willing to give area residents a second chance after bankruptcy.
“I won’t be able to find housing after bankruptcy.”
An apartment is pretty easy to find after bankruptcy. Like the credit card companies, apartments know they’ll get paid if you skip out on the lease. Some are hard-nosed about it, but not many.
You’ll also be able to get a new home loan, usually within about two years.
And that’s if we don’t manage to save your home in the bankruptcy in the first place. Often, saving your home from foreclosure is a major reason to file.
“Bankruptcy is shameful and immoral.”
Your personal morality is your own, of course, but we’d urge you to rethink your position here.
Major corporations file for bankruptcy every single day. There are plenty that have done so right here in St. Louis. Nobody involved in these bankruptcies has lost any sleep over it, and all these companies made more money in a day than the average person sees in a year.
You have the legal right to take advantage of this remedy. As long as you took out your debts fully intending to pay them you’ve got nothing to be ashamed of. And you certainly can’t help unforeseen circumstances like a job loss or a medical issue.
“I’ll lose everything if I file for bankruptcy.”
If you file Chapter 13 you shouldn’t lose anything at all. And if you file Chapter 7 with an attorney’s advice, you shouldn’t lose anything either, since we’ll be able to check what you own against federal exemptions and determine if using this form of Bankruptcy would force you to give up anything you really want to keep.
If you try to file on your own you could make mistakes you’ll regret, but if you file with Ledbetter we’ll keep you safe. Call now for your free consultation, and find out how bankruptcy can give you a better financial future. You won’t regret it!