Bankruptcy. The very word can cause anxiety and stress for many people. Bankruptcy, however, helps people who fall on hard times get fresh financial starts. In fact, in many cases, people who file for bankruptcy are immediately better off than they were before they filed.
Myth #1: Filing for Bankruptcy Will Ruin Your Credit
Many people in financial distress refuse to consider bankruptcy because they worry that it will ruin their credit. Two things are wrong with this line of thinking. First, simply ignoring bills that you cannot pay will certainly ruin your credit. Second, while it is certainly true that a Chapter 13 bankruptcy will appear on your credit report for seven years, it often has a less detrimental effect than accounts in collections, , delinquencies, or other problems. In fact, in just a few months, many people who file for bankruptcy have better credit than they did before filing.
Myth #2: Bankruptcy Is Always the Result of Financial Irresponsibility
You may believe that bankruptcy is a sign of financial irresponsibility and that filing would somehow constitute a personal failure. In reality, a significant number of bankruptcies are the result of circumstances completely out of a debtor’s control. Unexpected illnesses, job loss, poorly performing investments, variable interest rates, overuse of credit, or injury-causing accidents can result in unexpected expenses, an inability to work, or both.
Myth #3: Your Repayment Plan Will Create a Financial Burden
The court determines Chapter 13 payments by looking at a debtor’s debts, income, and allowable expenses, then sets an amount for you to pay each month that allows you to live, eat, get around, and pay other bills while making payments toward your debts. In addition, should your circumstances change in a way that makes the payment unaffordable, you could ask the court to modify your payment.
Myth #4: You Will Lose Your Home if You File for Chapter 13
Many people actually use Chapter 13 to keep their homes. In Chapter 13, you can take your past-due mortgage payments (often referred to as “arrears”) and pay them back during the course of your bankruptcy plan—which lasts anywhere from three to five years. As long as you can keep up your mortgage payments during your bankruptcy, you can keep your house. In some cases, filing for bankruptcy actually provides a good opportunity to renegotiate the terms of your mortgage with your lender to lower your payments.
Call the St. Petersburg Bankruptcy Lawyers of Berkowitz & Myer Today for a Free Consultation
Bankruptcy does not need to frighten you. In fact, it can form the first step to a significantly brighter financial future. At Berkowitz & Myer, we will thoroughly review your financial situation during a free initial consultation and let you know whether we believe you could benefit from filing for bankruptcy. To schedule an appointment with a bankruptcy lawyer in St. Petersburg, or call our office today at (727) 344-0123.