Bankruptcy is one of those concepts people tend to regard with apprehension and disgust: the idea that someone would intentionally announce their inability to pay their debts seems abhorrent to the very soul of modern society.
Unfortunately, this gut reaction can be counterproductive because it stems from a fundamental misunderstanding of how bankruptcy works in actuality. Bankruptcy, far from being a final end point of financial destruction, can be better characterized as an opportunity for past mistakes to be undone and rewritten in a hopeful future. While the implications behind bankruptcy can be troubling, it ultimately can be the best choice
Thus, here are some facts about bankruptcy that might surprise you:
Bankruptcy Doesn’t Kill Your Credit Score
Although it’s true that filing for bankruptcy can impact your credit score for up to 10 years, in the long run, it has little effect on your credit score. People who truly reform after filing for bankruptcy, who shift to
techniques, generally end up with credit scores that are about the same as those of people who have never gone bankrupt.
Filing is Fast
Bankruptcy doesn’t have to be a drawn out process: the entire procedure shouldn’t take more than a few months. Filing for bankruptcy begins with a series of documents and paperwork that needs to be filed with a bankruptcy court. After this, the court will require a creditors’ meeting and, with Chapter 7 bankruptcy, various counseling sections. Finally, the court approves of the bankruptcy filing and the agreed upon measures are set in motion. With a good lawyer, filing for bankruptcy should be a relatively painless and efficient process.
Bankruptcy Doesn’t Necessarily Mean Your Debts Are All Gone
When people think of bankruptcy, they probably have Chapter 7 bankruptcy in mind. They imagine an individual turning his or her back on all accrued debts. Chapter 7 bankruptcy does mean that all of a person’s debts are dissolved, but it also requires any extraneous assets to be liquidated to for creditors to take as compensation. While it is a somewhat unsavory idea, Chapter 7 is the best solution for someone who has very few assets and an unreliable income who cannot pay debts simply because he or she completely lacks the means to do so.