Why Do People Hesitate To File Bankruptcy?

Reasons To File Bankruptcy

People hesitate to file bankruptcy for a variety of reasons.  The first is the name bankruptcy has a negative connotation which has been around for centuries.  The truth is bankruptcy was put in place to help people who are struggling financially.  Bankruptcy is not a scarlet letter that someone has to wear around town notifying everybody in the city that they filed for bankruptcy.  There should not be the shame associated with bankruptcy that some people have.

 Fear Of the Unknown

The second reason people are afraid of bankruptcy is they really don’t know what around the corner.  Many people think that if you file bankruptcy, you will never get credit again.  This is not true.  Many people think that if you filed for bankruptcy, you can never own anything.  This is also not true.  People also feel that if you filed for bankruptcy, everyone is going to know about it and you are going to be held in shame.  This is also not true.  Instead of concentrating on the negative aspects of what bankruptcy could do, people should focus on the positive.  Bankruptcy goes all the way back to the Bible.  It was adopted in the US Constitution and the law has been reformed from time to time over the last 50 to 100 years.  The reason why bankruptcy is in place is that people should not be forced to struggle with debt for the rest of their lives.  If someone does not have the ability to pay and they do not have significant assets, they are entitled to a fresh start under Chapter 7 for most debts.  Some debts are not eliminated like student loans, recent taxes, parking tickets, child support and debts incurred by fraud. Chapter 13 is available to help somebody reorganize debt, saving home it’s in foreclosure, reorganize a vehicle payment and pay other unsecured and secured debt.

 Don’t Dwell On The Negative

So when people think of bankruptcy, I suggest that they don’t dwell on the negative of that word.  In fact, most of the negatives that used to be associated with bankruptcy simply don’t exist.  You can keep whatever property you have provided it’s not excessive.  You can obtain credit in the future usually within six months to two years and not everybody that you know is going to find out about your bankruptcy.  In fact, you would be amazed that bankruptcy listed are public record however, you have to access that information from the bankruptcy court to obtain it.

 Speak With An Attorney

So if you are someone who is thinking of filing for bankruptcy and you were worrying about the negative effect, I strongly suggest that you speak with an attorney who handles bankruptcy on a day-to-day basis.  That attorney will be open and honest with you.  He or she will tell you the advantages and some of the disadvantages.  But by far, the advantages outweigh the disadvantages.  In fact, the disadvantages are miniscule.  You simply have to wait a short time before you can obtain decent credit at a decent interest rate.  You also have to change some of your habits in terms of spending.  You also have to submit to some credit counseling which is a one hour session and you need to watch a two-hour DVD or video on personal financial management instruction.  You also have to appear at one meeting of creditors in front of a trustee.  Other than those requirements, bankruptcy is relatively painless and your law firm or attorney that you hire will guide you every step of the way to make the process as easy as possible.

 Remain Debt Free

Most importantly, your attorney should give you tips and advice on how to remain debt-free so that you never fall back into the situation again.  The bankruptcy law was put in place to help those honest debtors who are entitled to and need a fresh start.  Or those who wish to reorganize under Chapter 13.  Don’t dwell on the negatives of bankruptcy.  Look at the positives and see how bankruptcy can actually change your life for the better.

 

 

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