Misinformation, myths and assumptions seem to abound when it comes to bankruptcy and the laws surrounding the bankruptcy process. Whether people are under the impression that those who file for bankruptcy are financially inept, or it’s those looking to file who believe it will ruin their credit forever, it’s hard to separate the myths from the facts.
Below are 3 of the most common bankruptcy myths, along with corresponding bankruptcy facts.
Myth #1- Bankruptcy ruins your credit for 10 years.
This one is more tricky. Bankruptcy is reported on your credit report for up to a decade, but it doesn’t necessarily hurt your credit standing. Some people who file for Chapter 7 or 13 bankruptcy will see their credit score improve shortly thereafter. Why? It’s common for people’s credit to be really poor by the time they make an appointment with a bankruptcy attorney, such as Brooklyn’s Michael F. Kanzer & Associates. At that point, the only way is up, and bankruptcy can help eliminate the balances, end the negative reports, and allow you to restore your good credit.
The Kanzer law office strives to make a positive difference in the lives of the hard-working people of Brooklyn by specializing in financial recovery and well-being. Since 1994, Michael Kanzer & Associates has helped more than 500 bankruptcy clients discharge their debts.
Myth #2- People who file for bankruptcy are bad with money.
Of course in some cases this may ring true, but a majority of people who file for bankruptcy have fallen on hard times and can’t seem to get out of it. Some of the more likely reasons for bankruptcy are loss of a job, medical bills due to a serious illness, divorce or other hardships that can wreak havoc on your finances fairly quickly. Though the unemployment rate is gradually decreasing in most areas, there are still millions of Americans who are out of work or just returned to work, and need help getting their finances back on track.
Myth #3- Bankruptcy will prevent you from ever getting credit again.
It’s possible for those who file for Chapter 13 to actually borrow money during the case. As far as those who have filed Chapter 7, it’s common to receive credit card offers and car loans shortly after discharge. The rates are not great, but it’s credit nonetheless.