For a growing number of Chicago residents, the biggest obstacle to overcoming financial struggles may be their own unfounded fears.
Common misconceptions include the idea that bankruptcy will make it impossible to get credit, that the government will repossess all of your personal property, or that everyone in the neighborhood will know you filed for bankruptcy.
Depending on the type of bankruptcy for which you are eligible, bankruptcy has the ability to protect important assets, shrink large debts, and provide a fresh financial start.
Bankruptcy isn't for everyone. If you can get a handle on costs by refinancing your mortgage or tightening up your budget, it will be better for your credit - at least in the short term. But not everyone has those options. When simple measures aren't enough, a Chicago bankruptcy has the power to get debts under control so you can rebuild your finances.
Here are some of the most common bankruptcy myths - and the realities behind them - according to Bankrate.com.
Everyone will know you filed
Maybe if you're a famous actor or athlete, reporters will dig up the fact that you filed for bankruptcy. For a normal consumer, the only people who will know about your bankruptcy are your Chicago bankruptcy lawyer and your creditors. While it's possible that an employer could view your credit report and notice that you've filed, he or she would also see that you're in the process of conquering financial troubles.
You'll lose all your assets
Because Chapter 7 bankruptcy comes with the possibility of asset repossession, many people believe it's a given. This simply isn't true. States have exemptions that protect assets such as homes, cars, retirement funds, and more. If you continue making payments on an item - which should become easier with bankruptcy - you can keep that asset.
Your credit will be ruined forever
When you file for bankruptcy, your credit will take a hit initially. However, most Chicago bankruptcy attorney clients are already suffering from rock-bottom credit scores. At least bankruptcy allows you to do something about it. Just because bankruptcy remains a footnote on your credit report doesn't mean your rating will be permanently damaged. From the moment you start paying on time, keeping your credit ratio low, and making smart money moves, your credit will begin to recover.
Filing for bankruptcy is difficult
Bankruptcy isn't as complex or time-consuming as most people fear. Your primary concerns are making sure the paperwork is filled out correctly - which is why a professional bankruptcy lawyer comes in so handy - and ensuring that, if you have a payment plan, your payments are made on time. That's it.
More Blog Entries:
Consumers with Bad Credit Could Benefit from Chicago Bankruptcy: January 6, 2012
12 Myths About Bankruptcy, Bankrate.com