Debunked Bankrupcy Fears
Consumers who contact my office regarding bankruptcy often do so as a last effort. After years of struggle to pay down debt many are concerned how bankruptcy will affect them. The concern can be boiled down to four primary areas: 1) will bankruptcy really discharge my debts; 2) will I be able to keep my belongings and assets; 3) will bankruptcy ruin my credit; and 4) will my friends and neighbors find out.
Creditors do a great job of scaring people away from bankruptcy. Most of the above concerns are a result of a public relations campaign by creditors to misinform individuals about the benefits of bankruptcy.
The question will bankruptcy really discharge my debts is often asked because it seems too good to be true. Many individuals have struggled for years and have been burned by creditors, debt settlement companies, credit counselors or all of the above. Generally an individual who qualifies is entitled to a fresh start which entails the discharge of debts.
The question about retaining assets and belongings is another scare tactic. Bankruptcy is not intended to wipe a consumer out, rather bankruptcy is intended to give individuals a fresh start. To accomplish a fresh start there is a certain amount of exempt property. Many individuals keep all of their belongings and their assets.
The concern about credit score represents another scare tactic. News reports are ripe with the importance of a good credit score. What the reports don’t tell individuals is that a credit score will remain low for years while a individual struggles to pay off the debt. Beyond that most individuals who have missed even a few payments have a very low credit score anyway. Individuals who have filed bankruptcy can begin to repair their credit immediately.
Finally the fear of social stigma, my friends, relatives, and neighbors will find out. A recent statistic has revealed that one in ten people in the United States have filed bankruptcy. Likely the very same friends, relatives and neighbors have also filed bankruptcy. Bankruptcy is a mater of public record but individuals would have to seek out that information. Bankruptcy filings are not routinely accessible. Even beyond the facts, I always remind individuals that the most important thing to consider is the future. Saving face by avoiding bankruptcy because of the stigma at the expense of saving for retirement, education, homes, etc...
Write a comment
- Required fields are marked with *.