The common theme found in many of my blogs, is that bankruptcy is not something to be ashamed of. It is a protection here to help you when you need it. Things happen in life that can cause great hardship, including financial ruin. Bankruptcy is here to be an option for a potential fresh start. Here are some common misconceptions regarding bankruptcy:
- “I’m going to lose everything” – This is the first common misconception. Understand that bankruptcy is not a punishment. There are ways to protect assets. In bankruptcy law, these are known as exemptions. There are scenarios that allow you to keep your home, your car, family heirlooms, and much more. It is not as scary as you may think to file bankruptcy.
- “I should just pay off my debt” – Many people are concerned that their credit score is ruined. Chances are you have already severely damaged your score and report by running up too much debt. The plus side is that you get to relieve yourself of the stress in your life. This can lead to some serious personal and professional issues. It is not worth the wait to try and handle it on your own.
- “ This will ruin me for life” Not true, the negative effects of a bankruptcy usually last no more than two to three years. Plus, you get the added financial boost of not spending your future years paying off debts from the past, instead you get to move forward and save for a better financial future.
- “I’m a failure” – No you are not. You have run into a streak of bad luck, and many times things were beyond your control. Do you feel like bad things happen to good people? Did a loved one lose his or her job? Did your finances take a hit over the last several years? Healthcare issues cause you to get behind on your payments? Almost every time, you will find yourself in a bad financial situation, due to something out of your control.
I would love to discuss any misconceptions or concerns you may have regarding bankruptcy. As always, you are not alone!