I also know that you probably have some questions. That’s why this article you’re about to read will answer some of those questions for you, such as:
1 - Should I file bankruptcy?
2 - What’s the worst that can happen if I need to file but don’t?
3 - What will my life be like after bankruptcy?
4 - What other options do I have?
5 - How can I afford to file?
6 - What will people think of me?
7 - Will I be able to buy a house?
8 - Will it hurt my credit score?
You’re going to learn some surprising answers to all those questions when you read every last word of this article.
Now let’s dive in.
When I file bankruptcy, will it hurt my credit score?
The first thing you need to know is that bankruptcy almost always increases your credit score as soon as your debt are discharged.
This is totally backwards to how most people think. Most people are wrong. They think bankruptcy hurts your credit. It doesn’t hurt your credit. It helps your credit. Alot!
It’s true. The sooner you decide to file bankruptcy, the sooner your credit score improves. I know it sounds backwards. But ask anybody who has filed. They’ll tell you it’s true. Almost always, filing bankruptcy improves your credit score. Period.
Will I be able to buy a house after bankruptcy?
Yes. In fact, you only have to wait for 2 years before you can buy a house. The bankruptcy might stay on your credit report for 7 years. But it won’t keep you from buying a house after 2 years in. Most people think you can’t buy a house after filing. Well I’m here to tell you that you can. All you need to do is keep a good debt to income ratio for 2 years and you could be eligible.
What will people think of me?
So many people delay bankruptcy just because they’re afraid of the stigma. Listen. Other people’s opinions are worthless. You can’t deposit them in the bank. You can’t pay rent with them. They won’t keep you warm at night. They’re totally worthless.
Besides, if somebody thinks less of you for doing what is right, then they weren’t your friend anyway. And you should get them out of your life right along with all that debt. You’ll be richer and happier when you do.
If that’s not enough for you, remember that you don’t have to tell anybody. Yes it’s “public record”, but nobody is reading the newspaper anymore. When is the last time you heard of somebody going out of their way to see who filed? Exactly. It’s never happened. If you don’t tell them, they won’t know.
How can I afford to file?
The truth is, if you’re wondering how you can afford to file, that’s exactly why you can’t afford not to. If you’re struggling to put together the attorney’s fee, it’s because the credit card companies are sucking every last hard earned penny out of your wallet. Once you stop the bleeding, there’s enough left over to pay the one-time fee. That fee doesn’t charge interest either. It’s one and done. Over. Then the financial bleeding stop.
What other options do I have?
Right now we need to talk about two very misunderstood “alternatives” to bankruptcy. You will find both are not great choices.
Those two choices are debt settlement and credit repair. For both of those options, beware!
Debt settlement companies are for-profit companies that claim they can eliminate consumers’ debts by negotiating settlements with creditors that are a mere fraction of the consumer’s outstanding debt.
Many of these companies accomplish little to nothing for consumers and charge hefty fees. Yes, you read that right. Many debt settlement companies make promises that they simply cannot keep and leave consumers in worse financial state then when they began.
These companies advise consumers to stop paying debts and, instead, to place money into savings account so that enough money will accumulate to allow a settlement offer to be made to any creditors.
However, most consumers who sign-up with the debt settlement companies find the companies’ promises are empty. Creditors are under no obligation to settle for less money and often refuse to do so.
So why would you pay a debt settlement company just to be told no anyway?
Consumers who follow the debt settlement companies’ advice usually find themselves subject to creditors’ collection efforts, including lawsuits. All while the debt settlement company still takes their fee. In addition, consumers’ credit histories are further damaged when the consumers stop paying debts.
You might think there must be a better option than debt settlement, but credit repair doesn’t do much good either. A credit repair company is an organization that offers to improve your credit in exchange for a fee. The companies often promise to handle all the heavy lifting of working with the credit reporting agencies.
Credit repair organizations are different from credit counseling agencies, which are typically a free resource from nonprofit financial education organizations that review your finances, debt and credit reports with the goal of teaching you to improve and manage your financial situation.
According to the Federal Trade Commission, the credit repair industry is fraught with scams. To help avoid scammers, it’s important to research any credit repair organization before agreeing to work with it.
Many of these companies will simply provide you a form letter to send in to the big 3 credit reporting agencies and dispute every debt listed on your report and wait to see if anyone replies. Under the rules, if the creditor does not reply within a certain amount of time, then the debt must be taken off of your credit report.
This process is supposed to be reserved for disputing debts that are not reported properly, but many credit repair companies will have you dispute all of them knowing some will not respond and, therefore, your credit score will improve. Frankly, it does almost nothing.
Can you see now why so many people choose to file bankruptcy instead of getting ripped off by credit repair and debt settlement charlatans?
What’s the worst that can happen if I need to file but don’t?
Well, the worst that can happen is very scary. Worst case scenario is you get so far behind on your bills that your creditors sue you. You get served papers in person. And when they do that, they can now garnish your wages or even your bank account.
If they garnish your bank account it gets pretty ugly. Let’s say you’ve got $3,000 in the bank to pay rent, drive to work, feed your kids etc. And you owe the credit card crooks $6,000. With a garnishment, as soon as that $3,000 hits your bank, they can take it ALL out! And there’s NOTHING you can do about it!
It is worst case scenario. And frankly, it’s exactly why so many people choose to file. Because filing may not be super fun, but it’s a whole lot better than getting sued and having your bank account sucked dry.
What will my life be like after bankruptcy?
You will be pleasantly surprised at how much extra money you have! The truth is, once those credit card bills finally stop, things start to get much easier. You’re not wondering who you have to pay first. You’re not living paycheck to paycheck anymore. You’re done with the headache of finding to much month at the end of your money. It all gets easier.
That said, you’ll still need to work hard of course. And it’s a great opportunity to start the very important habit of saving.
Should I file bankruptcy?
So here we have the final question. Should I file bankruptcy?
The best way to answer that question is to take our free “is bankruptcy right for me” quiz. Once you take this quick and easy bankruptcy readiness quiz, you’ll find out if you qualify for bankruptcy, how much you could potentially save, and whether or not you really should file.
Yes. You’re just one quiz away from all the answers you need and a totally new financial life.
You want to take that quiz right now.
