Bankruptcy is usually considered a “four letter” word in many households – even in those whose debt is growing exponentially. However, even with the unemployment rate slowly decreasing, many families are still struggling to stay afloat. With layoffs, pay freezes, and rising costs of living, many families having to live off credit cards while skipping installment loan payments such as those for your home or car.
Filing for bankruptcy doesn’t have to be so scary. In fact, living in overwhelming debt for the rest of your life is much more scary than filing for bankruptcy, and for many families and individuals suffering from high debt, it may be the only way that they may ever be able to achieve financial normalcy.
Remember, bankruptcy isn’t for everyone. It’s definitely not for those who have a few maxed out credit cards. Bankruptcy is generally for those who have an overwhelming amount of credit card debt, $30,000 or more, or high medical bills making affording regular life impossible.
For those who have been considering bankruptcy, but are concerned about the overall impact it could have on their financial future, we are going to break a few myths:
Your Credit Score Will Never Recover from Bankruptcy
False. The purpose of bankruptcy is to give those with outstanding debt a fresh start, and part of that purpose allows individuals to rebuild their credit to a healthy score. “Generally, you will only have to wait for 12 to 18 months after you file for bankruptcy to once again start rebuilding your credit,” said Charles Bulger from Currencies.com. “And with proper management you will be able to fully financially recover from bankruptcy.
I’ll Have to Wait 10 Years to Get a Credit Card or Loan
False. Just because a bankruptcy may last on your credit report for 10 years doesn’t mean that you will not be able to obtain credit until then. In fact, many companies are willing to help individuals rebuild their credit by offering secure credit cards or higher interest loans.
I Won’t Be Able to Get a Job
Not true. Although some companies require a credit check at the time of application, they are always required to let you know in advance. Usually one bankruptcy will not keep you from gaining employment, however, if you are concerned that it may hinder your application, be upfront about it with your potential employers. If you have a worthwhile explanation, they are more willing to be understanding.
I’ll Never Be Able to Buy a House or Car
Again, not true. As long as you responsibly build your credit after your bankruptcy, you will be able to obtain financing for a house or a car. Not only will you be able to obtain a loan, but you will also be able to secure financing at good interest rates.
I’ll Never Ne Able to Manage a Credit Card Again
Just because the first time you had a few credit cards you maxed them all out, doesn’t mean that you will necessarily do it again as soon as bankruptcy clears you of all debt. If poor money management is what led you to bankruptcy, then it would be in your best interest to attend a few money management classes or even a shoppers anonymous meeting to get a better grasp on your finances. Debt may have ruled your life once, but bankruptcy gave you a second chance which means that it is time for you to take control of your financial future.
Bankruptcy does not have to be the end of your financial life. If handled carefully, you can recover from dire straits and gain control over your finances.