When considering bankruptcy, you may instinctively know that it could help you, but you may still feel a bit apprehensive about going through with it. The process makes you nervous. You don’t want to make any mistakes that you can’t take back.
This is common, so rest assured that you are not alone. The good news is that many bankruptcy fears are rather unfounded. Things are not the way they seem. To help you decide what you want to do, we’d like to address three common fears people have:
- Bankruptcy is going to ruin my credit score forever.
It’s not. The key here is “forever.” Yes, your credit score will take a hit when you file bankruptcy, but that impact lessens over time. Plus, depending on the type of bankruptcy you use, it’s going to come off of your credit report in at least 10 years, and perhaps as few as seven. Finally, there are tactics — such as using secured credit cards — to build your score back up. Nothing lasts forever.
- People are going to judge me for declaring bankruptcy.
They shouldn’t. For one thing, you probably didn’t cause the bankruptcy yourself. Maybe it’s related to medical debt, for instance, that you certainly didn’t want to take on. Furthermore, there’s absolutely nothing morally wrong with using the legal tool of bankruptcy to get your debt in order. That’s what it’s there for. Don’t let pressure from others dictate what you do.
- I am going to lose everything that I own.
You are not. There are plenty of ways around this. Even if you use Chapter 7 bankruptcy and have to liquidate your assets, not everything goes. You have exemptions that often apply to things like homes, vehicles and tools of the trade. If you use Chapter 13, you don’t even have to liquidate your assets. You lose nothing. Never assume it’s all going to be gone.
As you can see, these bankruptcy fears are not grounded in what the process truly looks like. Take the time to consider all of your options carefully.