Filing for bankruptcy should be used as a last-ditch effort to recover when personal finance spending goes out of control and not as a way to wipe your debt slate clean.
The current process of bankruptcy is much more complex than it used to be and there is never any guarantee you will be able to resolve all of your debt issues.
While bankruptcy rules may have changed, there are still some perpetuated myths that consumers still tend to believe about bankruptcy, especially where their credit is concerned.
Here are some of the untruths about bankruptcy and what you need to know: I'm Not Embarrassing Myself By Filing for Bankruptcy Many consumers that are genuinely need the help bankruptcy can provide to get their financial and credit house back in order are prevented by their own fear of how they will look to others.
Bankruptcy is a private issue and is often a necessity triggered by experiences in life that are momentous such as a divorce, death, loss of employment, or a serious medical complication.
People that start to get behind on bill payments due to big changes in life often fail to be able to catch back up and thus they ruin their relationship with the creditors, the credit rating, and their own financial stability.
Bankruptcy should not be taken lightly but it should also not be avoided solely for social reasons.
If it is the financial road that needs to be taken, there is no shame in trying to help yourself.
My Spouse's Bankruptcy Will Destroy Me It is possible for married couples to file independently for a bankruptcy.
If one spouse has debts racked up in their own name not shared with their spouse, they can file for bankruptcy relief without hurting the credit of their spouse.
However, if debts are created in both' names, it is important for both to file bankruptcy or the creditor will pursue the debt from the spouse who did not file.
The longer unpaid debts remain unpaid, the more harm will be done to the credit status of you and your spouse.
Bankruptcy Will Clear All My Debts Many consumers fail to realize the true intent of bankruptcy and instead feel it is a way to clear their credit's bad name and essentially not have to face the payment obligations they have created.
If you file for bankruptcy as a way to forgo meeting your payment obligations, you are committing fraud.
The bankruptcy courts today will be able to decipher who is genuinely working to resolve a financial crisis and who is looking to find an easy way out.
There Is No Hope for My Credit Many people who contemplate bankruptcy figure they have nothing to lose since they will never be able to bring their credit back up to par.
This is definitely not true.
All consumers, even those filing for bankruptcy, can and should work to repair their credit at all times.
One thing consumers must realize is that soon after bankruptcy, new solicitations for credit will start cluttering your mailbox.
Be wary of all these offers because most will be from subprime lenders or credit card providers who suggest they have the resources to rebuild your credit but you'll be paid way more than other consumers and likely have interest rates you can't afford to pay fresh off of a bankruptcy.
My Credit Will Be Stellar Thanks to Bankruptcy Filing People who think their credit score will rise automatically simply because their creditor debts have been discharged have another thing coming.
Bankruptcy affects a consumer credit history is a different way than other creditor information.
Bankruptcies will appear on a credit report for three years longer, showing up for ten years.
This will be reflective to lenders far into the future who may not be willing to take the risk in granting your credit or money.
If you are not able to get a credit card or other financing, your credit will be hard to repair and your score will not get the raise you are hoping for despite your 'lack' of debts.
Again, bankruptcy is a highly personal option for debt relief but it is not the right road for everyone.
Before filing bankruptcy, be sure that you are unable to find any other means for repaying your debts and working on credit repair to improve your standing on your own.