Most people in America don’t have a good understanding of bankruptcy and why it may be useful. For some, bankruptcy is something to be ashamed of, and so many do everything they possible can to avoid bankruptcy. Even in situations where they are extremely burdened with debt and are unable to pay expenses or save, they try to last as long as possible without filing. Though these people can be commended for their perseverance, the truth is that they are making a very bad financial decision.
In the right situations, bankruptcy can be useful and beneficial. Common misconceptions of bankruptcy are that you’ll never have a good credit score, you’ll never be able to get a mortgage or buy a car (at least not at decent rates), and you won’t ever be able to escape a cycle of poverty and indebtedness. These are all false. After filing for bankruptcy, many people are able to turn their finances completely around. Here are three great reasons why you shouldn’t be afraid of bankruptcy.
You Will Do Better Financially in Just a Few Years
If you compare two people who are both struggling with debt and are insolvent, and one is filing for bankruptcy and one is not, who do you think will be better off financially in two or three years? The research shows that more often than not, the person filing for bankruptcy will be much better off.
In many cases, credit counseling and debt forgiveness programs only help you enough to survive, but the amount of debt that remains will prevent you from getting any financial stability. By filing for bankruptcy, you can start anew and find real financial success. Studies suggest that those who file for bankruptcy are often much better off in a few years and have access to more credit than people who avoided bankruptcy.
You Will Have a Better Credit Score
The public perception is that bankruptcy will destroy your credit score and make it difficult to ever build it back to an adequate level. However, those who are struggling just above bankruptcy have so much trouble paying their bills that their credit score suffers anyway. Filers are able to turn things around and slowly can build their credit score back.
Loss of Retirement Income
If you are paying minimum payments on all of your loans, you will be paying longer and paying more money than the average person. Instead of being able to save money or put it into a retirement account, it will all go to minimum payments on debts. People who file for bankruptcy soon are in a position where they can begin saving again, and this could mean hundreds of thousands of dollars of retirement savings over the course of your lifetime.
If you are considering filing for bankruptcy, we can help. We have years of experience and expertise in bankruptcy law and can explain how the process works. Give our office a call and we can discuss your options.
