I have talked to potentially hundreds of potential bankruptcy clients by now, and with each new potential client I meet, it becomes more evident that many individuals have several misconceptions about the bankruptcy process and how filing for bankruptcy will affect them in the future.  One of the most common misconceptions about the bankruptcy process is that it will ruin your credit and you will be financially “doomed” for the rest of your life.  For most individuals, this is simply not true.

By the time most people even consider filing for bankruptcy, their credit score has already taken a beating due to the high amount of debt they are carrying (or their credit essentially being maxed out), late payments, missed payments, repossessions, foreclosures, etc.  For many, their credit score has been lowered so much by the foregoing examples that it cannot get any lower, and thus, there essentially isn’t any credit for the bankruptcy process to truly hurt.  What many people do not realize is that for most people, there is a great chance that your credit score will actually go up after you file for bankruptcy and rid yourself of all of the debt burdens that have been dragging you down.  As with everything in life, there are always exceptions.  There are some individuals with excellent credit scores who file for bankruptcy as a “preemptive strike” before things happen to cause their score to weaken.  For some of the individuals who fall within the foregoing category, filing for bankruptcy may lower their score slightly.  But, the vast majority of people filing for bankruptcy fall within the first category, and see an increase in their score after filing.

Many are also bothered by the fact that the bankruptcy filing will stay on their credit report for seven to ten years, and mistakenly think that the mere fact that the bankruptcy filing appears on the credit report is what will prevent them from obtaining a car loan or a mortgage in the future.  This, too, is a myth in part.  Many creditors will be apprehensive or will refuse to lend credit to someone immediately after a bankruptcy filing.  However, as more and more time passes from the time the bankruptcy case was discharged, the filing itself becomes less important and what you have done to rebuild your credit following the bankruptcy becomes a more important factor in determining whether to extend credit.  For example, a creditor will be much more likely to extend credit to someone who has filed for bankruptcy, but who has been on-time with all the payments on their post-bankruptcy debts, versus an individual who has obtained and defaulted on post-bankruptcy debts.  As such, the mere presence of the bankruptcy on a credit report is not necessarily the deciding factor in whether a creditor will extend credit to someone who has filed bankruptcy.

In sum, if you are feeling overwhelmed by accumulating debt and are feeling like you are in a hole that you cannot climb out of, filing for bankruptcy can provide you the financial relief that you need and give you the opportunity for a fresh financial start.  Many people I meet with are relieved to know that filing for bankruptcy can be a relatively painless process that will help free them from the financial burdens they are currently experiencing and that their credit score will start going up once the process is completed.  The opportunity to pay an attorney fee and filing fee (which is usually nominal in comparison to the amount of outstanding debts an individual may have) in order to discharge potentially thousands or hundreds of thousands of dollars of debt and to know that they will not be financially “doomed” for their life is an investment worth making for many people.

Contact us if you would like to discuss your circumstances to see if filing for bankruptcy can help you obtain a fresh start!