Most of us cringe at the thought of bankruptcy. With the media constantly outing celebrities and big businesses, delivering terrible tales of loss and soiled names, why wouldn’t we cringe? Many of us have even been in the very same position, where we feel stuck between a rock and a hard place. The thought and fear of bankruptcy soon slowly comes creeping in. Answer these questions below to see if your financial burden would actually benefit from bankruptcy. Read as we debunk typical bankruptcy myths and explain when and why you should start this year with a clean slate.
- Are bill collectors calling you?
- Do you pay for necessities with credit cards?
- Do you owe creditors more than you can handle to pay back?
- Are you unsure of how much you actually owe creditors?
- Have you considered debt consolidation?
- Do you make only the minimum payments on your credit cards each month?
- Do you feel your credit score is low far beyond repair?
- Do you feel scared or a lack of control when you think about sorting out your finances?
- Have you been extremely stressed at work or in your home life lately?
If you have answered “Yes” to 3 or more of these questions, you may be able to benefit from filing bankruptcy. Now before you search for the exit button on this screen, see how bankruptcy can actually help you.
First off, you should know that you are not alone. Many people just like you spend too much time stressing about mounds of unpaid bills and bad credit history. You may be way in over your head and unable to keep up with the number of bills that never cease to appear in the mail. Filing bankruptcy may be able to help you in one of two ways.
Filing Chapter 7
Filing for Chapter 7 bankruptcy will allow you to liquidate most of your non-exempt assets to pay off a portion of your outstanding debt. This is also called liquidation bankruptcy. Non-exempt assets generally include items that are unnecessary for living and working (i.e. valuable items, valuable collections, investments, second car, second home, etc.).
Filing Chapter 13
The second way filing bankruptcy can help you, is by developing a monthly payment plan spanning approximately 3-5 years, greatly reducing the amount you owe. This is often referred to as debt adjustment or debt reorganization. Filing chapter 13 bankruptcy can help to save you from foreclosure on your home or repossession of your vehicle, not to mention getting rid of harassment from those pesky creditors.
Biggest Bankruptcy Myth
Many people believe that bankruptcy will completely destroy their reputations forever, smearing their name as irresponsible, reckless and negligent to future lenders. In actuality, the opposite is true. Your reputation is typically judged based on your credit history. Once your bankruptcy case has been settled you can begin taking action to improve your credit score immediately. Some bankruptcy attorneys even offer programs that can help you to attain good credit in as little at 12-24 months. This is much quicker than waiting 7 years for each closed credit account to disappear from your records on its own, with hopes that creditors actually close the account.
Once you go through with the bankruptcy, you like many of our clients will be kicking yourself for not doing it sooner. Do yourself a favor and start fresh for this new year.