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If you have more debt than you can handle, you may have toyed with the idea of bankruptcy, but I often see people that are intimidated (or even scared) of the idea of bankruptcy and what it will mean. The thing is - being in more debt than you can pay is much scarier than something as straight forward and helpful as bankruptcy. A well-timed and properly planned chapter 7 or chapter 13 bankruptcy can be a wonderful solution to a debt dilemma and certainly nothing to fear.
Here are five reasons you should not be scared of bankruptcy:
#1 Bankruptcy will reduce stress in your life
I often hear from those that are in debt that they dread the ringing of their phone, delivery of their mail or a knock at the door. If you’re in debt, this fear may paralyze you. Debt collectors can be relentless. They will call from 8 am to 8 pm. They will call you at work and threaten you and can destroy your reputation on the job – they’re not supposed to, but they do! They send threatening letters, they garnish bank accounts and will never go away unless you deal with your debt. Filing bankruptcy will put an instant end to this source of stress.
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#2 Bankruptcy will give you back control of your finances
Most people I talk to envision bankruptcy as being out of control, but in fact it’s quite the opposite. In a chapter 7, unloading your debt will allow you breathing room in your budget to pay your living costs without worrying about servicing your debt. That puts you back in the driver’s seat. With a chapter 13, although you’ll be paying monthly installments to your Trustee, it should be less than your current monthly debt load. Once you get a fresh start, it’s up to you to ensure you keep your finances under control.
#3 Bankruptcy will not expose you to public ridicule
The idea that a bankruptcy is a matter of public record may worry you. But what most people don’t know is that the public record isn’t easily accessible. You have to pay for a subscription and you have to be specifically looking for someone. What’s more likely is that collection calls to your home and office will be the ones that tarnish your reputation. Although collectors are not legally allowed to discuss your debts with anyone, by leaving a message with the business name “DFS Collections” and saying they need you to call to “discuss a very important matter”, it's a red flag that you’re being pursued for unpaid debts.
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#4 Bankruptcy will not ruin your credit forever
Yes bankruptcy does stay on your credit report for a decade, but if you take the fresh start it provides to heart and don’t get yourself back in financial trouble, it will be better than years of late credit card payments, charged off accounts and maxed out lines of credit. By zeroing out your existing unsecured debts, you’ll end the monthly abuse to your credit report. And what I see most often with clients is that within a few months after filing, you’ll begin to get fresh credit offers. It’s important to be selective and use your new credit responsibly and your credit rating will be better off as a result!
#5 Bankruptcy will not mean that you lose your stuff
I talk to many people that worry that once they file bankruptcy, everything they own will be boxed up and sold off to pay their debts. This is far, far from the truth. In fact, you should be able to keep everything you own. If you’re current on your mortgage and car loans and don’t have more equity than you’re allowed according to your state exemption guidelines (which are more than fair) you will be fine. Standard household goods, TVs, clothing, computers and other common stuff will not be involved in your bankruptcy filing and will be yours to keep.
If you’re scared of bankruptcy, I’m here to tell you that overwhelming debt that you can’t afford to pay is much more frightening. Bankruptcy is a solution not a source of anxiety. Contact a reputable bankruptcy attorney like John T Orcutt for a free consultation at one of our convenient locations to find out if you qualify for bankruptcy relief and how we can help you.