Filing for bankruptcy can be a daunting decision, often clouded by misconceptions and fears. However, understanding the reality behind these fears can help you make an informed choice.
Here, we address three common fears that prevent people from filing for bankruptcy and explain why they are often unfounded. For personalized advice, contact Law Offices of Terrence Fantauzzi at (909) 552-1238 for a free consultation.
Fear of Losing Control Over Your Finances
Many individuals worry that filing for bankruptcy, particularly Chapter 7, will lead to losing control over their finances and assets. This fear is largely unfounded. In reality, over 97% of Chapter 7 cases are no-asset cases, meaning debtors typically do not lose any assets to the trustee.
Understanding Chapter 7 and Chapter 13
- Chapter 7 Bankruptcy: This type of bankruptcy involves liquidating non-exempt assets to pay off creditors. However, most cases are no-asset, meaning you likely won’t lose personal property.
- Chapter 13 Bankruptcy: This allows you to keep your assets and repay creditors over time through a structured repayment plan. You retain control over your finances and assets while paying a fraction of their value.
Filing for either type of bankruptcy does not mean a trustee will take over your financial life. You remain in control, making bankruptcy a viable option to regain financial stability.
Fear of Ruined Credit for Years
Another common fear is that bankruptcy will irreparably damage your credit score for an extended period. While bankruptcy does impact your credit, it is not as dire as many believe.
Immediate Credit Score Improvements
Post-bankruptcy, many individuals see an immediate improvement in their credit score. This happens because filing for bankruptcy discharges a significant amount of debt, making you a lower risk to lenders. Without overwhelming debt, you are seen as a safer bet for credit. Many people can start rebuilding their credit soon after their bankruptcy is discharged.
Fear of Public Exposure
Concerns about public exposure often deter people from filing for bankruptcy. They fear social stigma and public ridicule, assuming their financial struggles will be widely known.
The Reality of Public Records
While it’s true that bankruptcy filings are public records, the likelihood of your bankruptcy becoming public knowledge is minimal. For someone to discover your bankruptcy, they would need to actively search through public court records, which is unlikely. In fact, there’s a greater chance of people learning about your financial troubles through other means if you continue to struggle with unmanageable debt.
Get the Facts About Bankruptcy
It’s essential to base your decisions on accurate information rather than unfounded fears. At Law Offices of Terrence Fantauzzi, we offer a free consultation to discuss your financial situation and whether bankruptcy is the right option for you. Don’t let common fears prevent you from taking steps towards financial recovery. Contact us at (909) 552-1238 to get the facts and explore your options.