Over the last few years it has been common to see neighbors, friends and family members filing for bankruptcy to eliminate their debt. For most of us it is a blessing to get out from under a mountain of bills. The only people that really get upset about a person filing for bankruptcy are creditors. They want individuals to believe that their life will be over after the bankruptcy filing. If the creditors can keep everyone in the dark about bankruptcy, they will continue getting payments each month and continue making their wallets fat. I believe that most of all the misinformation on the Internet about bankruptcy comes from the credit industry. Even taking a step further, I think creditors are more supportive of debt settlement and debt consolidation companies. At least with a consolidation or settlement, the creditor will receive at least a portion of the debt back.
Life after filing for bankruptcy really isn’t that bad. Creditors tell individuals their credit will be destroyed if they file for bankruptcy. The only thing they don’t tell you is that your credit is already in the tank because of their credit ratios are high and all the late pays on their accounts. It’s common to see someone prior to filing bankruptcy with a credit score between 500 and 600. In reality, it can’t get much worse. When it is that low there is only one way to go and that is up. Creditors are opportunists and know that many people leave a bankruptcy filing being virtually debt-free. A few months after the bankruptcy discharge most individuals will start getting offers of credit in the mail. This is a mistake to jump on these deals because most of them come at a price. It’s best for someone to enjoy being debt-free and pay for everything with cash until their credit score gets high enough to get decent interest rates. In due time, credit will come back to these individuals after filing for bankruptcy.
Many believe that filing Chapter 13 bankruptcy doesn’t leave such a mark on one’s credit as filing Chapter 7 bankruptcy. The thought behind this is these folks think that creditors will look more highly on those filing Chapter 13 because of the repayment plan. For those of you that don’t know, a Chapter 13 bankruptcy requires an individual and their bankruptcy attorney to submit a feasible repayment plan that will last 3 to 5 years to the bankruptcy court. Since debts are paid by priority, all secured debts will be paid first and unsecured get whatever’s left over. I don’t know if this is true but many believe this theory. For someone that is financially strapped, it’s best to think of your family’s well-being and consult a bankruptcy attorney to discuss the matter. The last thing someone that is stressed out to be doing is worrying about what the creditors will think.
FAQ About Saving Assets and Income During Bankruptcy
All debtors want to keep as much of their assets and income as they can when they file bankruptcy. Some assets do need to be given back to creditors or the trustee to pay for secured debts and for some unsecured debts. Debtors with too high an income are required to file a Chapter 13 […]