Many people who are going through financial challenges can feel like they have nowhere to turn. Much of this feeling can stem from a fear of taking action to try to improve their lives because they worry that these efforts will fail.
Bankruptcy can be a very smart choice for those who have no other realistic way to pay off their debts. However, many debtors have heard myths and horror stories about things that could go wrong in a bankruptcy filing. They often use these anecdotes to rationalize not taking action. The following are some common myths about bankruptcy that you should not be afraid of.
People I know will learn about my bankruptcy
Bankruptcy filings are public records. However, this doesn’t mean that your family, friends and employers will learn about your bankruptcy. In the vast majority of bankruptcies, only creditors and government agencies will be notified.
I will lose all my assets
Whether your assets will be liquidated will depend on the bankruptcy Chapter that you are filing under. Chapter 7 bankruptcy involves the liquidation of most assets, but Chapter 13 bankruptcy revolves around the reorganization of debts. Therefore, it is possible to avoid losing your assets when filing for bankruptcy.
My credit will be affected
Filing for bankruptcy will indeed affect your credit score for a significant amount of time. But this does not mean that you will never be able to buy a home or car again. Eventually, your credit score will recover, particularly if you make smart financial decisions in the future.
Make sure that you look into your possible options if you are struggling with debts. Not taking action is probably the worst thing you can do, since your situation is likely to get worse when it is not addressed.