Five of the Most Common Bankruptcy Myths Debunked

Money

Going through the bankruptcy process is certainly a difficult experience, and it does have repercussions that can last for a relatively long time. Filing for bankruptcy is considered a last resort when facing a complete financial breakdown, but for the hundreds of thousands of Americans who file each year, it’s often their only viable option. For those who have filed, and those who are considering filing, it’s important to separate the truth about bankruptcy from the myths. Here are some common myths you may have heard about filing for bankruptcy.

Myth #1: Bankruptcy will ruin your credit forever.

It will take some time for your credit to recover from bankruptcy, but you can still build healthy credit. Student loans can’t be included in bankruptcy, and as you continue to pay off student loans, your credit score will benefit. If you are still paying a car loan, those payments will also help your credit. In general, record of the bankruptcy itself will stay on your credit report for ten years. However, many of the delinquent accounts themselves will drop off your report after seven years. With careful credit use after bankruptcy, you can expect your credit to get a boost at the seven-year mark.

Myth #2: If you had good credit before your bankruptcy, your credit report will have less damage than if you had poor credit.

There are a lot of elements that go into your credit score, and it’s important to accept that the bankruptcy itself, and the accounts it affected, will have the biggest negative impact on your credit. How much your credit score will drop is nearly impossible to predict until the filing has hit the credit bureaus.

Myth #3: You won’t be able to get a credit card after bankruptcy.

You can get credit cards after bankruptcy. You may have heard that the only type of card you can get is one with a secured line of credit. This isn’t necessarily true. You may very well qualify for a card, with a decent credit limit and interest rate, that doesn’t require a deposit. It’s important to note that you will start to receive unsolicited credit card offers, but read the fine print. There are institutions out there that will try to take advantage of your situation. Be patient, and make sure the terms of a card are reasonable. A credit card or two, with diligent payments, will be a benefit to your credit score.

Myth #4: You will have difficulty buying a car after bankruptcy.

Cars are amazingly easy to buy, even after bankruptcy. However, many finance companies will offer you ridiculously high interest rates. Be persistent. Inquire of all your financial resources, from the dealer to your personal bank or credit union and ask them to give you the best possible rate.

Myth #5 You can’t buy a house until a bankruptcy leaves your credit report.

In general, you may qualify for some conventional home loans four years after your Chapter 7 bankruptcy is discharged. If you filed Chapter 13, and it has been discharged, you may not have to wait the four years. Also, you may qualify for an FHA or VA loan two years after your Chapter 7 bankruptcy is discharged. With a good credit history after your bankruptcy, you should be able to find a loan that works for you.

A word about renting. A common, and frightening, myth about bankruptcy is that you will not be able to rent a desirable home for you and your family. Landlords and rental corporations look at a variety of factors when deciding if they will approve a rental application. Approval depends on everything from how much you make to whether you have a criminal history. Apply for the place you want, and work with the landlord if the bankruptcy is an issue.

Although filing for bankruptcy is far from ideal, sometimes it is the only way to get out from under crushing debt. In fact, for many, filing for bankruptcy is a new beginning. It’s important that you educate yourself as much as possible before you decide to file as well as after you file. Some of what people tell you will be very true, but you will also hear lots of half-truths and myths. Fortunately, we live it an information age, and there’s plenty of reliable information on bankruptcy readily available. Find out the facts, and look forward to a secure financial future.

Add Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Careers CEOs Companies Education Entertainment Legal Politics Science Sports Technology
video games
20 Things You Didn’t Know about Yahaha Studios
UPS
Does UPS Drug Test All Its Employees?
leather
The 10 Best American Leather Companies
Collectibles Credit Cards Investing Real Estate Stocks
Biotech
10 Biotech Stocks That are Solid Long-Term Investments
stock market
Is MGNI Stock a Solid Long Term Investment?
Baltimore Orioles
The 10 Most Expensive Baltimore Orioles Baseball Cards Ever
Aviation Boats Food & Drink Hotels Restaurants Yachts
Christopher Place Resort
20 Awesome Romantic Getaways in Tennessee
Peruse the Stalls at the Puerto de Frutos
The 20 Best Things to Do in Tigre, Argentina
La Croix Sparkling Water
The 10 Best Sparkling Water Brands in the World
BMW Bugatti Cadillac Ferrari Lamborghini Mercedes Porsche Rolls Royce
The Rolls-Royce Cullinan: An Enduring Love Affair
1999 Subaru Legacy Outback Wagon
The 10 Best Station Wagons of the 90s
E85 gas
What is E85 Gas and What is it Used For?
BMW Motorcycles Buell Ducati Harley Davidson Honda Motorcycles Husqvarna Kawasaki KTM Triumph Motorcycles Yamaha
2022 BMW K1600GT
A Closer Look at The 2022 BMW K1600GT
2022 Harley-Davidson Fat Boy 114
A Closer Look at The 2022 Harley-Davidson Fat Boy 114
2022 Bimota KB4
A Closer Look at The 2022 Bimota KB4
Electronics Fashion Health Home Jewelry Pens Sneakers Watches
Chrome Hearts
Why Are Chrome Hearts Jeans So Expensive?
Grand Seiko
A Closer Look at the Grand Seiko SBGN003 9F Quartz GMT
Nike Air Max 95
10 Sneakers that Epitomized 90s Fashion
Jawed Karim
How Jawed Karim Achieved a Net Worth of $160 Million
Renee Zellweger
How Renee Zellweger Achieved a Net Worth of $90 Million
The 10 Richest Crypto Billionaires in the World
Jeffrey Dean Morgan
How Jeffrey Dean Morgan Achieved a Net Worth of $12 Million