Filing bankruptcy- Is it really a bad idea?

by GuestPoster on June 8, 2010

It is common for people considering filing bankruptcy to worry about several things when they begin their journey to figure out whether they should file bankruptcy. They worry about things like how much does it to cost to file bankruptcy to having their possessions taken away. What are truly amazing are their concerns about not being able to get more credit. Below are some fears:

You will not be able to get credit; your credit will be ruined for 7-10 years. These are some of the things people will quickly tell you if they find out you are filing bankruptcy. Some of their statements have a ring of truth. Fortunately it really is not as bad as it sounds. When people provide blanket statements like this you should analyze the truth behind their statements. As a Michigan bankruptcy attorney I often hear these fears. The only way to help filers is to address these archaic fears

You will not be able to get credit if you file bankruptcy.

This statement is inherently false in every aspect. In fact, the day you file your name will go on a mailing list and creditors will be sending you credit offers before your bankruptcy is even discharged. Does this mean you should apply for credit? I don’t think it is a wise decision if a part of your filing bankruptcy was based on you having troubles with managing credit card debt. However, if the issue is medical debt or debt beyond your control then that is a different story. The real truth is you will not be able to obtain favorable credit rates and loan sizes based on your previous history. However, you will still be able to obtain credit. One way to think of this is you won’t be able to file for another 7 years after you file. Therefore, giving you credit now increases their chances of collection on missed payments if they occur.

Your credit will be ruined for 7-10 years.

This is also false; you can start to rebuild your credit during bankruptcy by reaffirming current debt and continuing to pay on that debt. If you reaffirm a vehicle or house and continue to pay on time or pay off a loan you will have a positive credit history right out of your bankruptcy. In addition, you need to take into account how too much debt affects your credit report. If you have too much debt that can negatively affect your credit report and you won’t be able to get a loan.

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