Common Misconceptions About Bankruptcy

man checking his finances

Utah might be a place for hardworking people, but it is also a state with one of the highest bankruptcy rates. According to World Atlas, it ranks fourth with 468,000 per 100,000 people filing one. There could be more if only people let go of its fear of bankruptcy.

Bankruptcy tends to have a negative reputation. It always means evil or dangerous. In reality, it is just a victim of different myths:

Bankruptcy Can Ruin Your Finances

This is an illogical idea. People who enter into bankruptcy proceedings are already in dire straits economically. On the contrary, it is one of the effective strategies to settle the debt. With the help of a debt relief lawyer from Law Office of Davis & Jones, P.C., you can consolidate your loans. Professionals can assist you in creating a debt-restructuring program that you will find more convenient to pay.

You Cannot Remove Bankruptcy from the Credit Report

credit computation

It is true that bankruptcy can have a severe impact on the credit report and your score. The public record can even last for years. However, filing for a Chapter 13 can work to your advantage. It stays on the report for only seven years. It is because the program allows you to make partial payments to your debts. Chapter 7, meanwhile, can be available for a decade.

You can also have the bankruptcy record removed from your report soon, but it is a complicated process. It involves checking for inaccuracies and filing disputes if you find any. If this is what you want to do, you can work with a lawyer to help you. Avoid heeding the recommendations of your family or friends. Do your own research and find an expert who can meet your needs.

Note, though, that bankruptcy is not the reason why you have a poor credit score. It is an accumulation of your delinquencies in settling your debts.

You Cannot Rebuild Your Credit When You File for Bankruptcy

You can, and you do not even have to wait until the bankruptcy record is no longer on your report before you do it. It is always best to focus on rebuilding your credit as soon as you have filed one. You can start with the following:

  • Follow the debt restructuring agreement religiously.
  • Work hard to pay your existing loans on time.
  • Do not take out other debts until you settled the existing ones.
  • Apply for a secured debt. It is a type of loan that ties an asset to the credit. In case you default, the creditor has the option to repossess the property.

This is not to say that you must declare bankruptcy right away if you are having financial difficulties. In the end, you should remember that you do not need to enslave yourself to debt forever. You always have options. If you feel unsure, you can always seek the services of professionals or experts. Going through the legal process on your own is not recommended since doing so can result in hefty losses.