Don’t Fall for These Common Myths about Bankruptcy Filings
The process of filing for bankruptcy and rebuilding your credit afterward is surrounded by some mystery and confusion. Misconceptions about the bankruptcy process can result in a poor understanding of who is or isn’t a good candidate for a Chapter 7 or Chapter 13 filing. Below, learn the truth about some of the most common myths perpetuated about bankruptcy filings, and contact an experienced Maryland bankruptcy attorney with any additional questions you may have.
Bankruptcy will leave my credit worse off than would paying down my debts.
If you’re falling behind on your debts and missing payments, your credit is inevitably taking a major hit. If it doesn’t appear that your financial circumstances are going to change any time soon, such as through receiving a major pay raise or inheritance, then continuing down the path you’re on won’t lead to improvement of your credit score. By filing for bankruptcy, your credit score will take a hit, but you’ll be taking a step in the direction of improved financial health. In time, the debts you can’t afford will be eliminated, and your credit will improve.
It’ll be years before I can get credit again after bankruptcy.
In the months immediately after a bankruptcy filing, you can expect your credit score to get lower. While you may have heard that you’ll be barred from obtaining any sort of loan or credit for seven to ten years after a bankruptcy filing, this isn’t usually the case. While they may not be ideal offers, many bankruptcy petitioners begin to receive credit card applications immediately after their cases are finalized. A report released by the Federal Reserve Bank of Philadelphia said that the average credit score of a Chapter 7 bankruptcy petitioner went from 538.2 to 620 between the time that they filed for bankruptcy and the finalization of their case.
The court will take all my stuff if I file for bankruptcy.
When filing for bankruptcy under Chapter 7, the court does have the option of seizing any assets not protected by an exemption to be sold, with the profits provided to your creditors. However, most Chapter 7 cases are no-asset cases, meaning that the court does not seize any of the petitioner’s property during the case. Most petitioners have more than enough exemptions to protect their most treasured items from seizure by the court.
If you need assistance climbing out of debt in Maryland, get help from the dedicated and skilled Germantown bankruptcy law firm Haeger Law by calling 888-463-3520 for a free consultation.