There are many sources of information available concerning bankruptcy, and not all of them are accurate. Several of the myths surrounding Chapter 7 bankruptcy are misleading and can falsely influence your decision about whether or not to file. It’s best to have all of the information straight before deciding what to do. A qualified Utah bankruptcy attorney will be able to advise you best, but here are some of the most common Chapter 7 bankruptcy myths debunked:
Myth #1- I will not be able to obtain credit after filing for bankruptcy.
Most people will tell you that filing for Chapter 7 bankruptcy ruins your credit, and that you won’t be able to establish new accounts once your bankruptcy is discharged. However, the majority of people who are considering filing for Chapter 7 bankruptcy have already fallen on hard times financially and their credit rating is already very low. Filing for bankruptcy actually bumps credit scores up a little for many people.
While it’s true that Chapter 7 bankruptcy is reported on your credit for up to 10 years, this is not necessarily a bad thing. You are able to start establishing good credit again since the old debts can no longer add new negative reports. There are many lenders who are willing to extend credit to those who have recently been through a bankruptcy. Accounts from these lenders can help you to rebuild your credit quickly when properly managed.
Myth #2- Filing for bankruptcy hurts my chances when being considered for a job.
Background checks, drug tests, and credit reports are all commonplace information requested by potential employers these days. There are some employers who are hesitant when a bankruptcy pops up on a credit report, but the vast majority of them understand that the economy is rough right now and that many good, honest people have had to turn to bankruptcy as a solution.
Most employers would rather see a bankruptcy on your credit report than a list of debts that you are unable to manage. Speaking candidly with your potential employers about your financial situation, and accepting responsibility for rebuilding your credit are usually all you need to do to put their mind at ease, if the bankruptcy is even mentioned in the first place.
Myth #3- Bankruptcy will eliminate all of my debt.
Chapter 7 bankruptcy is usually recommended for people looking to eliminate all of their debt, and not reaffirm on any accounts. Sometimes, however, homeowners may choose to keep their home through their bankruptcy and there are options that allow this to happen. Other types of debt that may not be removed through Chapter 7 bankruptcy include student loans and tax debt. Speak to an experienced bankruptcy attorney to determine exactly which of your debts will be absolved through Chapter 7 bankruptcy.