While we’ll never tell you that bankruptcy is an easy, quick fix to your financial problems, we will tell you the truth: Sometimes, bankruptcy is the best option for a more stable financial future. For most people, bankruptcy works best when it truly is the right option for the situation and the individual or household is willing to do the work to make changes in how money is managed in the future.
Many people avoid filing bankruptcy because they are scared of the process. Sometimes those fears are because people have bought into some common myths about bankruptcy. One myth is that your reputation and credit is ruined by bankruptcy.
Bankruptcy is a legal proceeding that is recorded publicly. But most of your friends and family probably don’t troll the court listings, so if you are not a major company or celebrity, your bankruptcy isn’t going to make headlines.
Chapter 7 bankruptcy does stay on your credit report for ten years. However, if you are in a place where bankruptcy truly is the best option, your credit is likely already suffering or about to suffer. Bankruptcy can stop a cycle that might be impossible to get out of otherwise.
A second big myth is that you have to liquidate everything you own in a bankruptcy. This isn’t true: Even a Chapter 7 bankruptcy features exemptions on many personal items. Depending on the type of bankruptcy you file, you might be able to keep your home, your car and many personal items. To understand how bankruptcy filing might impact your personal belongings and situation, consider speaking to an experienced legal professional.
Source: Bankrate, “12 myths about bankruptcy,” accessed April 21, 2016