Don't Believe Everything You Read About Filing Chapter 7 Bankruptcy


Over the years there have been many myths and legends built-up about the negatives of filing Chapter 7 bankruptcy. With the introduction of the Internet, these rumors have exploded like they were on steroids. Many people believe that many of the lies and mistruths found on the Internet are put there by members of the credit industry. It makes sense that they would do this because if they could keep people in the dark about filing bankruptcy, they will continue to get paid interest payments for eternity. Isn't that what they're in business for?

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Probably the biggest misconception about bankruptcy is that it will destroy your credit. It is true, that filing bankruptcy isn't good for your credit, but when someone is in a financial position to be unable to pay their bills, a bankruptcy filing really couldn't make it much worse. There are a few things that come into play in developing one's credit score. One of the biggest things to look at is debt ratios. When a person has all their credit tapped out and no available credit, they have extremely high debt ratios. When this begins to happen usually people start shuffling their bills and when some of them start to get behind, the creditor starts reporting them as late pays. Many of these accounts will go 30, 60, 90 days past due and more. At this time, the individual's credit score is already in the tank and filing Chapter 7 bankruptcy might actually help to turn it around. Filing Chapter 7 bankruptcy will wipe out all unsecured debts. So if the majority of a person's credit is wrapped up in credit card debt, medical bills and personal loans, filing Chapter 7 might just be the medicine that the doctor ordered.

Everyone's situation is different going into bankruptcy and that's why it's important to discuss the matter with a bankruptcy attorney. The bankruptcy attorney will be able to decipher a person's finances and tell them the positives and the negatives of filing bankruptcy. People with a large amount of unsecured debt, many times will walk from the bankruptcy discharge being virtually debt-free. This can even work for someone that is upside down on a mortgage or an automobile loan. At this time, they can surrender the property and wipe out any liability in the bankruptcy discharge.

Filing Chapter 7 bankruptcy takes about 4 to 6 months to complete the entire process and for best results should be done with the help of a bankruptcy attorney. Not long after the bankruptcy discharge, credit will become available at a price. This is the time when an individual should be very careful to not get them in the same situation that they just got out of. Creditors are opportunists and know that someone exiting bankruptcy cannot file again for eight years. People should be wary of offers and even discuss them with their bankruptcy attorney before signing their life away. A few years after the discharge, credit will come back and the bankruptcy filing will be a blip in their past.


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