Bankruptcy Offers a Fresh Start for Some Individuals
Is it ever a good idea to file bankruptcy? If you think the answer is always no, think again. Persistent myths about bankruptcy might work against you if you are ever faced with the decision whether to file.
One myth about filing for bankruptcy is that it ruins your credit. This is not true. A Chapter 7 bankruptcy remains on your credit report for 10 years, while a Chapter 13 bankruptcy stays on file for seven years. During those years, however, you are fully entitled to reestablish credit, assuming you meet certain criteria. Chapter 13 filers, for example, must be a year into repayment with an excellent payment history.
Another persistent myth about bankruptcy is that you will be unable to purchase a home after filing. If, however, you consistently work to reestablish your credit, you can qualify for a home loan. The same general rules apply in Chapter 13.
Finally, many people believe that their credit score will automatically decrease upon filing for bankruptcy. But experts say that late payments, collections and repossessions leading up to bankruptcy harm your credit score more than the actual bankruptcy. In fact, if you forecast the depletion of your finances and file bankruptcy before late payments begin to pile up, your credit score may remain largely intact.
Should you file? Experts say that filing bankruptcy is a much better idea than keeping bad debt on your credit profile year after year with no repayment plan. Although bankruptcy is not the solution for everyone, it may be a viable option to help you preserve the credit you have worked hard to build.
If you are considering filing for bankruptcy, contact an experienced bankruptcy attorney to discuss your situation and determine your course of action.