When you have debt that feels insurmountable, bankruptcy might be the best option to regain your financial freedom. Bankruptcy can offer you a path out of debt and stop creditors from contacting you. Filing for bankruptcy is a significant life choice and will affect your credit for a couple of years or more.
It is essential to keep this in mind when deciding to file for bankruptcy. Countless myths make bankruptcy seem like a bad idea. When in reality, it may be the most favorable option for you.
What are the biggest bankruptcy myths?
Myths about bankruptcy are rampant and make the process seem difficult. Choosing to file for bankruptcy is not a frivolous decision and should be taken seriously. To help you make your decision, consider these common bankruptcy myths:
- Bankruptcy is not common: While bankruptcy rates have been falling for a few years, there were still 753,333 individuals who filed for bankruptcy in 2018.
- Your credit score will suffer: Lenders could begin to mail your credit offerings within a month or two of filing for bankruptcy. These creditors see you as less of a risk because you don’t have any debt obligations. Additionally, your credit score should increase considerably after filing.
- People who file for bankruptcy have failed: Many people who file for bankruptcy do not have crippling credit card debt. Medical bills, divorces and losing your job are common reasons people end up in this situation. Beginning the filing process also shows that you are committed to fixing this issue and are holding yourself accountable.
- All of your debt will be gone: Bankruptcy will eliminate a lot of your debt, including credit card bills, medical debt and any personal loans. However, debt from unpaid taxes, student loans, alimony and child support will not be discharged.
Before making this important life decision, you may want to assess how much outstanding debt you currently have. There may be an alternative to bankruptcy that could fit your needs better.
If you are thinking about filing for bankruptcy, speaking with an attorney might help you make your decision. An attorney can look at your unpaid debt and make a recommendation for you. If bankruptcy is the best option, they will be able to walk you through the filing process.