Bankruptcy: Facts Vs. Fiction

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Bankruptcy: Facts Vs. Fiction

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Bankruptcy has earned a bad name among the general population. People often want to avoid someone who has filed for bankruptcy. However, it will be astonishing to know that bankruptcy is more common than you would like to think or admit. In fact, bankruptcy is one of the best ways to get rid of a huge amount of debts and wipe your financial slate clean. According to Dallas based bankruptcy law firm Recovery Law Group, people fear bankruptcy because of the various myths surrounding it. Sifting fact from fiction is important so that people are aware of the benefits of bankruptcy. Some of the most common myths associated with bankruptcy include:

The prior credit report can affect bankruptcy

Nothing can be far from the truth. No matter how good or bad your credit history was prior to filing for bankruptcy, it has absolutely no effect on your credit after bankruptcy. When you file for bankruptcy, it is mentioned on your credit report, irrespective of your past credit information. Depending on the chapter of bankruptcy you file under, bankruptcy can appear for a period of 7-10 years. Unlike previous credit information, this is going to affect your credit rating in the future.

Bankruptcy causes irreparable damage to your credit rating

Yes, mention of bankruptcy can harm your credit rating, but just like nothing is permanent in life, this is also a temporary setback. You can start making efforts for rebuilding your credit even before your bankruptcy is discharged. Seeking professional assistance from financial counselors can go a long way for rebuilding credit. You can start by living within means, avoiding unnecessary expenditure and paying bills on time. These methods can help build positive credit to improve your credit rating.

You won’t be able to secure a credit card after bankruptcy

People with bankruptcy find it difficult to get credit at a reasonable rate, however, they can get secured credit cards which make things easier for them. Other options available include getting a credit builder loan which involves paying a deposit as collateral against the loan.

Before falling prey to rumors, it is important to find out the truth about the various debt relief options including bankruptcy. After weighing the pros and cons of each option, you should decide which would be the best way to get rid of debts. In case you wish to seek assistance from experienced bankruptcy lawyers Dallas , you can call 888-297-6023.