If you live in California and have been experiencing financial problems, you’re not alone in your struggle. In fact, economic distress is not isolated to this state alone. Tens of thousands of people throughout the country are experiencing similar problems. For some, a solution may be found by cutting back on spending or finding a way to generate a secondary form of income. Others will seek debt relief by filing for bankruptcy.
Bankruptcy can be used as a valuable financial tool. There are several myths associated with this type of debt relief, however, and it is important to know fact from fiction before determining if it’s a viable option in your case.
Bankruptcy is a public matter but you can keep it private
It’s a myth that everyone you know will be aware if you file for bankruptcy. While such information is, in fact, a matter of public record, unless you’re a celebrity or business mogul who is often the subject of headline news, there’s no reason everyone must know if you take advantage of this debt relief program. It’s simply not true that the whole world will automatically know that you have filed for bankruptcy.
Your credit score won’t be ruined forever by filing for bankruptcy
Another myth associated with bankruptcy is that using this form of debt relief ruins a person’s credit score forever and prevents someone from being able to obtain credit down the line. This is not necessarily so. Yes, if you file for bankruptcy, it appears on your credit report and stays there for several years.
However, it will eventually be removed from your credit report. As for obtaining credit, there are numerous ways to rebuild your credit score after filing for bankruptcy. In fact, you may even be able to secure a loan or obtain a secured credit card, where you pay a cash deposit up front to secure your credit line.
You do not necessarily lose everything you own
If you’re hesitating to file for bankruptcy because you’re worried it will leave you with nothing, this is a myth. Depending which program you file under, there may be numerous assets you can retain ownership of, including, perhaps, your home, clothing or even a motor vehicle.
Each bankruptcy program has its own eligibility requirements. To know what assets you can keep, you first must determine which program best fits your needs.
Seeking debt relief doesn’t mean you’re a financial failure
This is, perhaps, one of the most common myths associated with bankruptcy—that if you file a petition, you have failed financially in life. On the contrary, some of the largest corporations and wealthiest people have not only avoided financial ruin, but restored solvency and built back stronger after taking advantage of the debt relief options that were available to them during difficult economic times.
If bankruptcy can help you get out of debt and lay the groundwork for a stronger financial future, what about that is a failure? It’s a myth that filing for this type of debt relief means a person is a financial deadbeat. It is simply not true. If you’ve encountered financial problems, it’s wise to explore all options, including those associated with Chapter 7 or Chapter 13 bankruptcy.