5 Reasons Bankruptcy Is Nothing to Fear

Don't let fear keep you in debt

Image Source: Flickr User amboo who?

Many people have a fear of filing bankruptcy – and it's an illogical fear. Today we'll dig into the anxiety attached to the idea of bankruptcy, who perpetuates these worries and why they do it. We'll also look at why you should look past this to what your true concerns about your finances should be and how bankruptcy is far more helpful than something to fear. Here are the top five worries associated with bankruptcy.

#1 Fear that people will know

If you're considering bankruptcy, you may worry that everyone will know that you've filed and have “gone broke.” First, it's unlikely that anyone would know you filed bankruptcy unless you tell them. Even though bankruptcy filings are “public records,” it's difficult to search for them, and you must have special access to a Federal records site to search. What people will know, more likely, is that you're struggling financially if your car is repossessed from your driveway because you can't make payments.

#2 Fear that you are a failure

Many will see filing bankruptcy as a sign of failure, but this is also an unreasonable fear. Most bankruptcies are due to job loss, divorce or an accident or illness. These are major life events – not failures. They can happen to anyone at any time and wreck your finances. Choosing bankruptcy to get out of a messy financial situation caused by one of these circumstances is not a failure but a better plan for the future after something bad happens to you.

#3 Fear that you will be judged

Yes, there is a judge in the bankruptcy court, but they are not “judging” you. The Trustee assigned to your case reviews your financial documents and signs off on your petition for discharge in Chapter 7 or repayment plan in Chapter 13. The judge usually signs off on the Trustee recommendation, and while they may ask a couple of perfunctory questions, there is no “judgment” in the process. It's a legal option, and no one in the court system will condemn you for using it.

#4 Fear that you are irresponsible to your creditors

So long as you didn't intend on skipping out on payment when you signed up for credit, you are not doing anything untoward when you opt for bankruptcy. The business of offering credit is done with the knowledge that there will be a certain amount of loss. You don't ever hear about American Express, Discover, Visa, or MasterCard going broke. As a matter of fact, they make billions in profits each year. Your creditors have likely made more profit off you over the years than they will lose if you file.

#5 Fear of the fallout from bankruptcy

Many people fear what will happen after they file bankruptcy. They don't have a specific fear, just general fear that it's a turn for the worse, and things will be worse. This is completely unfounded. Things will be much better after you file – immediately – within just a day or two after you file. If debt collectors call, you tell them you filed, and they will hang up and not call again. With a Chapter 7, you can stop paying many of your bills. With a Chapter 13, you can stop foreclosure and get time to catch up. It's good stuff.

Who wants you afraid of bankruptcy?

Your creditors would prefer you delay bankruptcy so they can keep collecting interest, late fees and penalties when you pay bills late, max out your credit cards and fall farther and farther behind. Creditors make much more money from customers who are struggling financially than those who pay their bills on time and don't get over their head in debt. Debt settlement companies like to tell you to use their services instead of bankruptcy. These companies profit greatly from you paying them fees to work out a deal that usually won't benefit you nearly as much as a bankruptcy.

Here's what you should be afraid of instead

If you can't afford to save, imagine your retirement years without savings. Imagine struggling financially at an age when you're too old to work but are still deep in debt. Picture your kids having to max out student loans because you can't help them with college. Don't keep paying the debts you can't afford, and that are out of control. Fear unmanageable debt – not a legal and permanent debt relief solution like bankruptcy.

Contact the Law Offices of John T. Orcutt today to find out more about how North Carolina bankruptcy can help you. Call +1-833-627-0115 for a free bankruptcy consultation in Greensboro, Raleigh, Fayetteville, Wilson, Garner or Durham.