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Debt Relief

Why You Shouldn’t Fear Filing for Bankruptcy

Every year, millions of Americans file for bankruptcy to get rid of their debts and start rebuilding their finances from scratch. For them, bankruptcy is very helpful in regaining control of their financial lives. However, while this legal process helps many, it could benefit many more if most people weren’t so afraid of it.

You may have been considering filing for bankruptcy but decided against it out of fear. Well, you may not realize it now, but that fear is holding you back and preventing you from making the right decisions to live a debt-free life.

Filing for bankruptcy shouldn’t be a tragedy, and it may be precisely what you need to do to get your finances back on track. Read on to discover why you shouldn’t be afraid of bankruptcy and how a bankruptcy attorney can make the process as easy as a walk in the park.

Why Are People Afraid Of Bankruptcy?

People fear bankruptcy for a wide variety of reasons. Some mistakenly believe that bankruptcy will force them to sell all of their most valuable assets and that they will have to live on the street from now on. On the other hand, others believe that they will never be able to apply for a mortgage loan or a credit card ever again after filing bankruptcy.

Believe it or not, these fears cause most people to miss out on the benefits of bankruptcy and continue to live drowning in debt.

The Federal Reserve Bank of New York estimates that about 14% of U.S. households owe more than they own. However, while most of these households could take advantage of bankruptcy benefits, less than 1% of them actually file for bankruptcy.

Even in these times of economic turmoil, when many people are out of work, most would rather live with debts they can’t afford than even consider filing for bankruptcy. However, this doesn’t have to be the case for you.

Let’s take a look at the most common fears related to bankruptcy and why you may have nothing to worry about.

You Won’t Lose All Your Assets.

A common misconception about bankruptcy is that it will make you lose all of your assets. While this myth is popular, it is completely false. Although you may have to sell some things, you won’t have to sell all your possessions when you file for bankruptcy.

For example, in Chapter 7 bankruptcy, you will have the opportunity to exempt some assets from the process. The exempt assets won’t be affected by your bankruptcy filing in any way. Depending on the state where you file, chances are you may exempt your home, a modest vehicle, your furniture, clothing, salary, and much more. Then, your non-exempt assets will be sold to pay off your creditors.

However, filers usually lose nothing at all. This is because most bankruptcy filers do not own any non-exempt assets. In these cases, their debts are wiped out, and they don’t have to sell anything.

Your Credit Can Be Repaired.

Another thing that many people worry about when considering bankruptcy is its effect on their credit score. Truth be told, bankruptcy will impact your credit severely and will remain on your credit report for between 7 to 10 years. However, that doesn’t mean you won’t have access to credit during that time. In fact, you could access new credit shortly after filing for bankruptcy.

Many creditors are in the business of offering loans to people who have just gone through bankruptcy. Of course, these loans have higher interest rates than usual, but they will be helpful to start repairing your credit right after your debt discharge.

There’s Nothing To Be Ashamed Of.

Some people see bankruptcy as an admission of defeat and decide to avoid it. They would rather have their debts eat them alive than go through such ” humiliation.” However, filing for bankruptcy is nothing to be ashamed of. Regardless of the reason for your financial difficulties, using bankruptcy as an escape route should be viewed as an intelligent decision rather than a disastrous mistake.

On the other hand, if you fear that your friends, family, and colleagues will find out that you filed for bankruptcy, keeping it private may be easier than you think. Although bankruptcy filings are in the public court records, this information is usually not accessible unless it is newsworthy. The only people who will know about your filing from the court are your creditors. It is doubtful that your acquaintances will find out about what happened unless you decide to tell them yourself.

It Might Be The Right Solution For You.

Consider Working With An Experienced Bankruptcy Attorney

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