Myth: Bankruptcy will erase all my credit and I
will start with a clean slate.
Fact: The credit report still reflects all debts
after filing bankruptcy. Each debt included in the case
will be labeled "account included in bankruptcy".
The date filed and case number for the bankruptcy remains
on the credit report for 7-10 years, depending on the state
in which you reside. This can make you a high risk borrower
for future loans, and you usually will not receive the best
rates IF you get approved for credit at all.
Myth: : I won't have any more monthly payments if
I file bankruptcy and all my problems will be solved.
Fact: Any debts secured by a car, home, motorcycle,
etc. must be kept current in order for you to keep your
asset. Otherwise the lending institution can eventually
repossess or foreclose on your property. Many times, lenders
place a second lien on autos or homes in order to grant
loans. These debts are considered secured and most often
have to be repaid.
Myth: If I make late loan payments, my credit is
already ruined so I might as well file bankruptcy.
Fact: A few late payments to your creditors definitely
do not ruin your credit. A credit report with a bankruptcy
filing is much worse than a report with some late payments
while you were going through a difficult time. Most lenders
understand difficult times and will work with you as long
as your explanations for late payments or slow credit makes
sense. If you work with your creditors to get caught up
to date, you will be able to regain your credit worthiness.
Many individuals file bankruptcy as a solution to
stop annoying collection calls or to fix a temporary financial
problem, but do not weigh out the long term effects of this
action. Your creditors will most likely work with you through
financial hardships. Many approve reduced payments for a
temporary period, waive fees, and/or reduce interest.
For more information on possible solutions to your financial
problems, contact us at 1-800-225-2555 ext. 5530 to
set up an appointment to meet with or talk to our
Budget Advisor. She will be glad to review your situation
and make suggestions and recommendations to improve your
situation.
