Many people get into a financial predicament where filing for bankruptcy will be beneficial to them. Unfortunately, there are reasons people will not go through with a bankruptcy, but they are often unsound. The following are just of few of the most common of these reasons.
1. Your rating will go down drastically
Although this is true, you shouldn't let this be a barrier to declaring bankruptcy. The main reason for this is that your credit will only drop for a certain period of time. But if you keep paying your bills on time, your credit rating will slowly move up. There are many ways to begin building your credit again. One example is with a secured credit card. This type of card is secured by a cash deposit in a bank account. You don't have access to this money unless you cancel your card. But you can use your credit card up to the limit of your deposit. As long as the bank that issues the card reports to all three credit agencies, you will be able to build up your credit by making your payments on time.
2. You will never be able to borrow again
Yes, it is true that your bankruptcy will appear on your credit report for approximately 10 years. However, the longer the bankruptcy was in the past, the less it will be held against you. If you need to finance a car or other purchase, the bankruptcy, if it is far enough in the past may not be held against you at all. The worst case is you will have to pay a bit more in interest, but if you have built up your credit rating, you may not even have to pay higher interest rates. Most lenders are looking at your credit score and not the specifics of the credit report.
3. You will lose your house
Well, if you have fallen hopelessly behind in your mortgage payments, you may lose your house anyway. But if you are current on your mortgage payments, the chances are that you will not lose your home. There are many protected assets when filing for bankruptcy, and your main residence is one of them.
However, if you are about to lose your home, a bankruptcy can help save you money in the aftermath of a foreclosure. When your lender repossesses your house and sells it for less than you owe, the lender may bill you for the difference, along with other fees associated with the foreclosure. A bankruptcy can often stop this from happening, even if the foreclosure cannot be stopped.
Myths about bankruptcy abound, and you should never let your preconceived notions of bankruptcy prevent you from pursuing this important road to debt relief. Your best course of action is to consult with a bankruptcy law office like Phoenix Law. An initial consultation is often free of charge.