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Bankruptcy: Too many misconceptions about this helpful tool

On Behalf of | Sep 16, 2021 | Bankruptcy

Many people assume that they know all about bankruptcy. Actually, most know little about it. Some people jump to conclusions about the people who file for bankruptcy, judging them, mocking them and avoiding them.

Well, that is a bunch of nonsense, and, in these situations, you discover just who are your true friends. Bankruptcy can be an appealing option for people who want to turn around their financial lives. Taking that first and deliberate step may be difficult. However, gradual rewards will follow. And it is time to put an end to the misconceptions about bankruptcy.

The beginning of a successful journey

Bankruptcy is not a sign of failure. Many people not in financial dire straits make too many assumptions about bankruptcy. Here are some of them:

Bankruptcy will follow you forever: No, bankruptcy is not a permanent albatross around your neck. A Chapter 7 bankruptcy – considered a straight-ahead bankruptcy in which a person must sell his or her assets – will remain on your credit record for 10 years. A Chapter 13 bankruptcy stays on your credit report for five years.

You will lose your home and car: Under a Chapter 13 bankruptcy — which reorganizes your debts – you usually keep your property, including your home and your car, if you complete a repayment plan ordered by the court. However, with Chapter 7, the possibility exists that you may lose your home or car.

Only deadbeats and losers file for bankruptcy: Good people face financial problems, too. A major health crisis may cause financial upheaval to anyone and their family, causing them to teeter on an uncomfortable and unexpected precipice. A medical scare can lead to exorbitant bills that the average person may have difficulty paying.

Bankruptcy represents failure: No, it does not. Bankruptcy allows a person to take better charge and responsibility for his or her financial life. It can represent a first step toward success as long as you trust your decision and make a few changes.

A financial tool like no other

If you go through bankruptcy, many of your debts will be discharged, creditors such as credit card companies, health care providers and landlords will no longer hound you, and you no longer need to keep looking over your shoulder.

With a little work and determination, you can rebuild your credit and eventually begin borrowing again, perhaps in as little as three years. Do not listen to the nay-sayers and know-it-alls. They simply have the wrong idea.