The Truth About Bankruptcy

Like so many life changing events, bankruptcy is largely misunderstood. In many people’s minds, the very word bankruptcy carries a negative connotation. But unless you’ve been through it, you don’t fully know what it means. Truth is, bankruptcy isn’t as scary as you may think. In fact, for many consumers struggling with overwhelming debt, the prospect of continuing to scrape by with no hope for the future is much scarier than the reality of bankruptcy and the hope it offers.

Here are some bankruptcy truths that can ease your mind about filing:

Truth: You Should Be Able to Keep Most of Your Assets

If you picture a giant moving van backing up to your home to empty its contents, taking your car and the deed to your home after you file bankruptcy, relax. If you have kept current on your house and car payments, you should be able to keep them (so long as you don’t have a huge amount of equity in an expensive home or car).  If you are behind on your house or car payments, Chapter 13 can offer you the opportunity to get current. What's true is that you should be able to keep your computers, TVs, clothes, furniture and even your house and car. The only thing you'll really lose is your debt!

Truth: It's Likely No One Will Ever Know You Filed (Unless You Tell Them)

Yes, every bankruptcy filing is a matter of public record, but someone has to specifically research you in the bankruptcy filing database to find out. Unless you’re a politician, celebrity or famous athlete, no one will be looking. It takes some research and knowing where to look to find out someone has filed for bankruptcy. The only people that will know you’ve filed for bankruptcy are people you tell. If you want to keep it private, you should be able to. Being in debt is embarrassing. Finding a solution to that debt and getting a clean slate doesn’t have to be.

Truth: You Are Admitting You Need Help, Not That You Are a Financial Flop

Hitting a speed bump in your personal finances doesn’t mean you’re a failure or a less worthwhile person. A variety of different reasons can cause overwhelming debt. Illness of a family member, such as Alzheimer’s or cancer, unemployment, divorce, death of a spouse or any other major life event can increase expenses or decrease income causing financial straits. This isn’t a judgment about your fitness as a person – that’s life – bad things happen to good people. The best thing to do is get yourself out of the predicament and back on track – your life will be less stressful and you’ll feel better about yourself.

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Truth: You Can File Bankruptcy and Leave Your Spouse Out of It

In this day and age, with people getting married later in life, it’s increasingly common for people to keep their debts separate. If your debts are largely in your name only – credit cards, medical bills, personal loans, etc, there’s no reason your spouse should also file. For any debts you have together, the creditor can still pursue payment from your spouse. If you have a mortgage together, but not much equity and the rest of the debt you need relief from is in your name, this works for an individual bankruptcy filing. A reputable bankruptcy attorney will be able to best advise you on what works for you and your spouse.

Truth: You Can Start Rebuilding Your Credit As Soon as Your Filing Is Accepted

As it is (pre-bankruptcy), if you are maxed out on your credit cards and owe past due bills, no one will want to offer you credit. But if you clear out all the past dues with a bankruptcy filing, you can start to rebuild your credit right away. Starting with a secured credit card and working up to a low limit unsecured card and then higher limit cards, you can rebuild your credit step by step. As long as you are careful to keep your debt low and make all of your payments on time, you will be able to rebuild your credit score and enjoy the clean slate a bankruptcy offers.

Many of the negative notions you have about bankruptcy are simply inaccurate. And you have to also compare the truths about bankruptcy with the truths about languishing in mounting debt you can no longer afford to pay. In many situations, filing bankruptcy is preferable and can improve, rather than debilitate, your life and financial status. Contact a reputable, experienced North Carolina bankruptcy attorney to find out if bankruptcy is right for your financial situation.