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Whether you have lost your job, overspent, stacked up mounds of medical debt, or have gone through a difficult divorce, there are many different things that can leave you in over your head with debt. While this debt can often be put under control by ensuring a new, strict budget or by consolidating debt, sometimes these measures aren’t enough. Sometimes this financial burden requires a more drastic measure, such as filing for bankruptcy.
Although bankruptcy has become more understood, it is often still thought of as very scary. Many people who may consider bankruptcy fail to file due to their fear that it will ruin their credit score, overshadow their records, and thus ruin their ability to borrow indefinitely. However, this is not the case. Here are 4 myths to know about bankruptcy and what it actually entails.
Myth #1
If your credit report prior to filing for bankruptcy was good, it can help to diminish the impact that filing will have on your credit.
While it would be nice if this were the case, your credit score will take a big hit for a while regardless of whether you’ve had a great credit history in the past. However, what will actually impact your credit score are the number of debts and the cost of those debts that you are looking to get discharged.
Myth #2
If you file for bankruptcy, it will stay on your credit report for at least a decade.
While Chapter 7 bankruptcy will in fact stay on your credit report for 10 years, Chapter 13 bankruptcy will not. If you file for Chapter 13 bankruptcy, it will come off of your credit report after a period of seven years. The best news is that no matter what type of bankruptcy you file, your credit will eventually improve.
Myth #3
If your bankruptcy is visible on your credit report, it will result in a poor credit score.
Although your credit score will likely suffer for a period of seven to 10 years (depending upon the type of bankruptcy that you file), after a period of four to five years during which you make smart credit decisions, your credit score will once again start to increase. Once a few years have gone by, you may want to consider rebuilding your credit through opening a secure credit card or a small installment loan. Just be sure that you always keep the amount that you spend under 30 percent of your credit limit.
Myth #4
As soon as I pay off my bankruptcy-related debts, they will immediately cease to be visible on my credit report.
Although it would be nice if this were the case, you will have to wait seven to 10 years for any bankruptcy-related debts to come off of your report. This is when the bankruptcy filing will also disappear.
It’s important to remember that while filing for bankruptcy can definitely help you when you are in over your head financially, filing alone is not enough. It’s necessary that you make certain lifestyle changes in order to ensure that you don’t fall into the same situation again.
Toronjo & Prosser Law Helps Those Who Are Dealing with Bankruptcy
It’s undoubtedly stressful to realize that you don’t have enough money, and even more stressful when you realize that filing for bankruptcy may be your best option. That’s why it’s so important to consult with a knowledgeable and experienced Dallas bankruptcy attorney.
At Toronjo & Prosser, our qualified Texas Bankruptcy Attorneys can help you to navigate the process. To learn more or to schedule a free consultation contact us online or call us today!