Filing for bankruptcy is usually a last resort for people who have found themselves in a financial hole. Just the word bankruptcy sounds scary because of all the negative connotations that come with it. People tend to think that bankruptcy carries carries so much weight that their financial future is doomed. This is not really the case. After all nothing lasts forever, even bad credit. There are ways to improve your credit after bankruptcy with a little bit of knowledge and a lot of patience. It doesn’t matter what got you to the point of filing bankruptcy, whether it was misusing credit cards, a divorce or illness, the point is you can recover from it. This leads us to point out some of the popular myths surrounding the ever so scary bankruptcy.
Your credit is permanently ruined
After bankruptcy it is common for people to have a higher credit score in recent years after filing. If you work hard to reestablish yourself as a good credit risk. One way you can do this is by keeping an eye on your credit report. Every 12 months you are eligible to receive a free credit report from the three major credit bureaus which are Equifax, Experian and TransUnion. Always check your credit report for any mistakes such as debts that are listed twice. In addition, there are a variety of credit cards available to those that need to re-establish their credit like the Orchard Bank cards.
You will lose everything you own
This is a big misconception that often keeps people from filing for bankruptcy. People tend to think they will lose everything and end up homeless, but this is not the case. Bankruptcy laws change from state to state, but every state has exemptions that protect a variety of assets. Such assets can include, your house, your car, retirement money, household goods and clothing. If you have a mortgage or car loan chances are you will keep them as long as you are making the payments.
Everyone will know I filed for bankruptcy
It is true that bankruptcy is a public legal proceeding, but unless your a well known person or company and the media gets a hold of the story it probably not going to get out. There are so many people that file bankruptcy these days that chances are its not even going to get reported for lack of space. The only people that are really going to know whats going on are your creditors.
If your married both you and your spouse has to file
This is not necessarily true. Today it is common for only one spouse to have accumulated debt in their name only. If the couple has massive debt in both their names then it is usually recommended that they both file. If they don’t file together and only one spouse files then the creditors are gong to try to get payment from the other party. Determining whether both parties should file really depends on the debt they have together, by no means does this suggest both have to file.
You can only file for bankruptcy once
Ideally nobody wants to file for bankruptcy once, let alone twice, but you can. You can file for bankruptcy more than once, but in October 2005 a bankruptcy law went into effect lengthened the required wait between filings. You can only file for Chapter 7 bankruptcy once every eight years. You have to wait two years to repeat a Chapter 13 filing and four years between a Chapter 7 and a Chapter 13 case.
You can charge up all your credit cards before filing
You could do this, but its not a smart move because its called fraud. Remember when you file for bankruptcy you have to go in front of a judge. Maxing out all your credit cards because you are going to file bankruptcy does not look good on your behalf. All your purchases you have made before filing will be reviewed and no judge is going to be sympathetic towards meaningless spending.
It’s hard to file for bankruptcy
On the contrary, filing for bankruptcy is easy. As a matter of fact, you technically don’t even need an attorney. Now, this is not to suggest you shouldn’t have an attorney, but the truth is that its not as difficult as people think. With that being said everyone’s financial situation is different and for some it can be more difficult than others.
You won’t be able to obtain credit for ten years
Bankruptcy does stay on your credit report for ten years, but this does not translate into you won’t be able to get credit for ten years. If you choose to there are ways to obtain credit and build your credit. One way is to use a secured credit card. This is a safe way for you to build credit because the risk of going into debt is not the same as with a traditional card. A secured credit card requires you to make a deposit in order to use the card. Other than the deposit the card works just like a credit card. The security deposit is there in case you don’t pay your bill, the bank has some reassurance the funds are covered You should find a card that reports to the credit bureaus and one that doesn’t specify its a secured card.
You won’t be able to get a job
While it is true that today more and more companies are running credit checks on applicants they can’t do this without your permission. Legally you have to sign a document that gives the company permission to pull your credit report. Now, with that being said, refusing to sign is probably not the way to go either, but you could just be honest. If you know the company is reviewing your credit then its not going to hurt you to just be honest about your bankruptcy. Bankruptcy is not as uncommon as you might think so maybe you will find a potential employer who is understanding especially if your truthful about it.
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