Filing for bankruptcy can feel like hitting rock bottom with no hope for the future, but when done right, it’s actually a fresh start. Although bankruptcy will stay on your credit report for at least seven years, it’s not the end of the world. The decision to declare bankruptcy isn’t easy, but when you look at it through the lens of a financial reset, it can transform the way you approach your situation and support you in reclaiming your life.
Myths can make bankruptcy seem worse than reality
There are so many myths about bankruptcy that might be holding you back or altering your perception of the process. Don’t believe the myths. According to bankruptcy attorneys from Reed Law Firm, some of the most pervasive myths include:
· Your credit rating will be permanently destroyed. In the long run, bankruptcy can actually improve your credit rating since it’s a fresh start. Most people are able to obtain a loan within a few years of completing their bankruptcy.
· Bankruptcy is only for people who make bad financial decisions. There are many people who need to file due to chronic illness, unemployment, or housing market changes. According to the data, tens of thousands of people file every month.
· Bankruptcy requires losing your home. Not everyone has to give up their home. And often, filing for bankruptcy can actually stop foreclosure.
· Married people both need to file. You can file bankruptcy on your own without your spouse.
· Bankruptcy is a one-time thing. It depends on where you filed and what Chapter you filed, but there may not be much of a waiting period before you can file again.
These are the most common myths that hold people back from filing. It’s highly suggested to contact a bankruptcy attorney as soon as possible to get your information directly from the source. They’ll be able to tell you everything you need to know while taking your unique circumstances into account.
There is a predictable recovery timeline
Whether you file for Chapter 7 or Chapter 13 bankruptcy, there is a predictable timeline for recovery that will help you gain clarity and certainty around when you’ll be able to start rebuilding your credit.
Chapter 13 bankruptcy will fall off of your credit report after seven years, and Chapter 7 will fall off your report after 10 years. That can seem like a long time, but when the alternative is that you’ll stay drowning in debt, struggling to pay your bills, it’s worth the wait. If you can’t pay your debts, you could end up struggling for 10 years and you might even get sued at some point. Bankruptcy offers a stress-free way to handle debt that you can no longer manage.
You don’t actually need credit to live
Maybe you’ve heard about people who live without credit, but think that’s only a lifestyle that works for rich people. After all, how can anyone afford the basics in life without making payments? Everything is so expensive.
The truth is, while it does cost good money to buy or lease a new car, buy a home, and pay for all of the seemingly normal things in life, those expenses aren’t truly necessary. Plenty of people live great lives without relying on credit. You can rent an apartment or house instead of having a mortgage, and decent, reliable used cars can be purchased from between $1,500 and $5,000, depending on the year and make. You don’t really need to make a $300 to $500 per month car payment to have reliable transportation. You probably won’t get all the fancy electronics and extra features with a used car, but all that isn’t actually necessary.
Bankruptcy is a great learning opportunity
If you’ve never thought about getting financial counseling before, then bankruptcy will be a good reason to look into that. In fact, it will probably be a legal requirement as part of your case. However, regardless of a court order, you should do whatever you can to learn as much as possible so you don’t repeat the same financial mistakes.
Look into learning budgeting skills, money management practices, and any kind of financial education that will help you in your personal life or business.
Embrace your next chapter in life
Going through bankruptcy is challenging, but can lead to a stronger financial foundation and better money management habits. Many people find life after bankruptcy significantly better and go on to buy a home, build a substantial savings account, and even run a business. The bankruptcy process exists to help people recover financially. It’s only the end of old habits and situations.