There are a lot of myths about filing personal bankruptcy. Many of these myths are the invention of credit card companies and banks and those lobbying on behalf of these entities. The goal is to scare consumers into thinking that filing bankruptcy is the end of the world.
The Truth about Filing Bankruptcy
The truth is that millions of consumers file bankruptcy each and every year because bankruptcy is completely legal. Moreover, it is the only viable debt management solution that protects debtors and their property from the collection efforts of creditors.
Going through bankruptcy is not an easy process. In exchange for giving debtors a chance at a fresh start, the Bankruptcy Code requires a great deal from them. Debtors must reveal the most intimate details for their financial situation in the bankruptcy petition and schedules as well as at the Meeting of Creditors. They must comply with strict bankruptcy rules and procedures. Chapter 13 debtors must commit to a Chapter 13 plan and that often means living on a very tight budget for three to five years.
How Does Filing Bankruptcy Benefit a Consumer?
Filing bankruptcy has a number of advantages that make it the right choice for millions of consumers each year. Among the advantages afforded by filing bankruptcy are:
- Breathing room for a debtor to solve his financial issues;
- Harassing collection calls and other collection efforts, including foreclosure and repossession, stop almost immediately;
- May result in an improvement to a debtor’s credit score because derogatory credit reports on unsecured debt will stop;
- Allows a debtor to restructure debt (Chapter 13); and
- Wipes out most unsecured debt.
One of the biggest benefits of bankruptcy is psychological. Debtors who are being bombarded with phone calls and letters from creditors and collection agencies often feel that they have lost control over their lives. The constant fear of being served with a notice of foreclosure, being sued, or having their car repossessed can be overwhelming. Filing bankruptcy restores a debtor’s sense of control.
What about the Stigma Associated with Filing Bankruptcy?
Most people believe that paying their bills is not just a legal obligation, but a moral one as well. This is why there is such a stigma attached to filing personal bankruptcy. The credit card companies, banks, and lobbyists want people to believe that only deadbeats file bankruptcy. But that’s just not the truth. The truth is that between April 1, 2009 and March 1, 2010, over 1.4 million people filed bankruptcy.
Getting Legal Help
Filing bankruptcy is nothing to be ashamed of. Unfortunately, lots of honest, hardworking people run into financial difficulties each year and bankruptcy is a legal and viable means of resolving those financial difficulties. So, if you have questions about bankruptcy and need help deciding whether it is the right option for you, you should contact a qualified bankruptcy attorney in your area.
