Dealing with a personal financial crisis is never simple or pleasant. Thankfully, filing bankruptcy is one way out of the hole. But you may have some inaccurate or harmful beliefs about bankruptcy without even knowing it.
Due to the complications of bankruptcy and the societal stigma surrounding it, it is easy to be scared or uncertain about the process. That is why it is necessary to dispel common bankruptcy myths.
Myth #1: Paying off debt is better
While filing bankruptcy is a serious financial decision, it does not necessarily make it a bad or worse choice. In reality, bankruptcy can be the best option for your situation. This is especially true if your debts are more than half of your income and there is no realistic way to pay it back within a few years. Bankruptcy may be the best method for living a debt-free life.
Myth #2: You will lose all your important assets
You may assume declaring bankruptcy means giving up your car or house. However, you may be able to hold onto these assets. Under Chapter 13, you keep every asset. A Chapter 7 bankruptcy may require you to surrender some assets, but it is different in every situation. In many cases, vehicles and property are safe when filing bankruptcy.
Myth #3: It will permanently damage your credit
One reason you may be delaying bankruptcy is that you believe your credit score will never recover. This is not true at all. While your score may drop and you may have more limitations on accessing credit right away, there is no reason you cannot repair your credit after bankruptcy. In fact, you may even get a higher credit score than before bankruptcy. Do not worry about your credit being forever doomed.
As you can see, there is no reason to buy into these misconceptions. Bankruptcy can be the right choice for many individuals.