Filing for bankruptcy ruins your credit for 10 years.
Not True. As with any other credit information, the fact of the bankruptcy can stay on your credit report for 7 to 10 years. (Remember, if you are considering bankruptcy it is highly likely that your credit rating has already been damaged, especially for the purpose of obtaining a home loan.) You can start rebuilding your credit, however, even before your bankruptcy is completed. Continuing to make your house or car payment on time can help you reestablish a good credit rating, as can making timely payments on a Chapter 13 plan or on any new loans.
Everyone will know you filed for bankruptcy.
Not True. The fact of your bankruptcy is a public record but unless you are a prominent official or high profile person, people aren’t going to go looking.
After the recent changes to the bankruptcy law, filing bankruptcy doesn’t help much.
Not True. The 2005 changes mean that a few people may no longer be able to file a Chapter 7 case, but most people are still able to get the same relief now as before the law changed. If a Chapter 7 is not available to you because of the 2005 changes, Chapter 13 may still offer you significant relief.
You are a bad person for filing bankruptcy.
Not True. Bankruptcy is a solution to help good people go through a tough financial time. It provides people with the fresh start that they deserve. Congress passed the bankruptcy laws because Congress recognized that we needed a safety net in our economic system for individuals, who have little control over large shifts in our economy or over unexpected personal developments such as job losses and medical expenses. The events of late 2008 should be making it clear to all of us that our financial health is not usually a function of whether we are good or bad persons.
You can pick and choose what to put into bankruptcy. Continue reading ‘Bankruptcy Myths’ »