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Dispelling Bankruptcy Myths

Published on January 4th, 2020

People may be hesitant to file a bankruptcy action, even if they are seriously in debt and their finances are out of control. In some people’s minds, there’s a stigma involved with bankruptcy. Or, maybe filing bankruptcy feels like admitting failure to make good in the world. 

Collection agencies and creditors take advantage of these feelings. They often call and declare that your unsecured debts and credit card bills can’t be discharged in bankruptcy. These and other allegations made by collections representatives are likely not true; they’re just trying to pressure you to get their funds. 

If you have debts that need to be discharged in bankruptcy, you should consult an experienced and knowledgeable bankruptcy attorney to learn more about your rights and how to uphold them. Here are some myths about bankruptcy that a credentialed legal professional can help to dispel:

You Creditworthiness Will Be Ruined: FALSE
People may fail to consider filing for bankruptcy because they think it will ruin their credit forever. However, this is an untruth that credit companies would have you believe. In actuality, filing for bankruptcy may be a viable way to rebuild credit. 

Certain people, particularly those who have stopped paying the creditors, may reap the benefits of bankruptcy and get a fresh start. Although bankruptcy can legally stay on your credit report for as much as ten years, its effect on your credit score can begin to decline the day your case is closed. To rebuild your credit after bankruptcy, you will need to adopt responsible credit habits. That means paying your bills on time, using only a small part of any available credit, and not applying for a lot of credit all at once. 

Furthermore, several lenders are willing to give secured and unsecured credit cards to people who have filed for bankruptcy. You would be well-advised to research ways to rebuild your credit as soon as you receive your bankruptcy debt discharge.

Filing for Bankruptcy is Financially Irresponsible: FALSE
You may put off filing bankruptcy because you will feel or appear financially irresponsible. That may seem so on the surface, but it is not true. Filing bankruptcy can help you to afford the necessary costs of living without throwing your hard-earned money away, paying high-interest credit cards. Plus, while you’re bogged down paying off debt, you aren’t saving for retirement. That puts your financial future at risk. 

The ever-increasing costs of living may force many individuals to rely on credit cards to get by. Even aging Americans who believed they had saved enough money for retirement are filing bankruptcy in growing numbers. People generally file for bankruptcy because of circumstances beyond their control. That could be things such as:

  • Loss of employment or other steady income
  • Reduced hours or pay
  • Divorce 
  • Unexpected or significant medical expenses that aren’t entirely covered by insurance

Since filing for bankruptcy will only have a negative impact on your credit temporarily, it doesn’t carry the same social stigma as it did in the past. When challenging economic times occur, many people struggle to make ends meet. Bankruptcy opens the door to greater possibilities. To find out how you can benefit, contact a bankruptcy attorney, like a bankruptcy law firm in Oklahoma City, OK, in your local area.

Thank you to the experts at MartinWren, P.C. for their input into bankruptcy law.

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