The thought of filing for bankruptcy can make you feel like a terrible failure. It can be overwhelming, depressing and downright horrifying. You may be afraid that you'll never again have good credit, that everyone will know that you can't pay your bills or that you'll have to sell everything you own, including your home, to pay your creditors. Declaring bankruptcy might feel like the end of the world, but in reality, it can be the fresh start you really need. In this article, learn why bankruptcy isn't going to be the worst experience of your life.
1. You're Not Alone
The economy may be on its way up again, but you're not the only one filing for bankruptcy. In 2010, 1.53 million people declared bankruptcy, an increase of nine percent.
There are many reasons for declaring bankruptcy, and it's not always about irresponsibility or poor choices. The most common reasons for filing for bankruptcy include:
- Unexpected expenses
- Loss or reduction of income
- Extended illness or injury
- Over-extension on credit
According to a May 2011 study on FindLaw.com, 13% of the U.S. population admitted to considering bankruptcy at some time in their lives. It's important to recognize that you are not the only one who has suffered from economic hardships in the past decade.
2. Your Credit Can Be Repaired
Many people believe that filing for bankruptcy means being labeled as unworthy of credit for a lifetime, but that is incorrect. Bankruptcy filings do stay on your credit report for ten years, but even during that time you'll have the opportunity to improve your credit.
You can begin rebuilding your credit immediately after bankruptcy by:
- Opening a new checking or savings account
- Getting a secured credit card
- Getting a retail or gas credit card
- Paying off your credit card balances every month
Not only does bankruptcy not mean the end of your credit standing, with hard work and diligence, bankruptcy can end up improving your credit.
3. You Won't Lose Everything You Own
Filing for bankruptcy does not necessarily mean that you'll lose everything you have. In most cases, your home and belongings are safe. In fact, bankruptcy filings can stop the foreclosure of your home and prevent your car from being repossessed, at least until your financial situation is resolved through the courts.
4. Bankruptcy Is Not Published
You may have seen auction notices in your local newspaper for people in financial trouble, but filing for bankruptcy doesn't mean that someone will announce to everyone you know that you can't pay your bills.
Your attorney will know, your creditors will know and public bankruptcy information can be found through the bankruptcy court – but how often do you search court websites to find out if you know someone who declared bankruptcy? Probably not often.
5. Creditors Will STOP Bombarding You
In spite of laws designed to prevent bill collectors from harassing and abusing you, you've probably experienced at least one creditor who stepped over the line. Collections calls can be horrifying, but the good news is that, once you've filed for bankruptcy and it has been reported to your creditors, they are legally prohibited from contacting you directly.
There is life after bankruptcy. Unfortunately, there are a lot of myths and inaccurate information out there. In an era that has been overwhelmed by terrible economic conditions, bankruptcy has become commonplace, but this has also led to an increase in resources to help you work through what can be a scary process. Use the information in this article, along with the advice and support of your bankruptcy lawyer, to help you understand the realities of bankruptcy.