One of the most frustrating things about bankruptcy is that it’s so misunderstood. You don’t really care much about it until you’re in a dire situation and need it – and then there’s so much myth and misinformation it becomes an incredibly daunting task to decide how you’ll proceed.
So today, we’re here to bust a few of the most common myths about bankruptcy. As always, if you’re in a situation where you don’t think there’s any other option, please call us – we’re happy to walk you through all of your options.
Myth #1: After bankruptcy, you’ll have no credit for 7 to 10 years
There is no truth to the bankruptcy myth that you have to wait through seven years with bad credit after filing bankruptcy. Bankruptcy does show on your credit report for 10 years, but even so, you can regain good credit in just three years. Our clients often have purchased cars and even qualified for mortgages only two to three years after bankruptcy.
People who file bankruptcy are often surprised by how quickly they’ll start getting credit card offers in the mail again. Offers for unsecured or secured credit cards (which require a deposit to the bank) with a low limit can arrive within a month of the debt discharge. Some of these cards are unsecured. Some are even offered to people by the same credit card company that was listed on the bankruptcy.
It’s a good idea to get a small credit card and start making regular, on-time payments to start rebuilding your credit. With three years of rebuilding credit, you will be able to finance a house at a good mortgage rate (if you are making enough money).
After only a year of rebuilding your credit, you will start getting approved for $1000 and higher credit cards again. Ninety percent of your credit score is based on what you’ve done the last three years. So once you have three good years after bankruptcy, you’ll have a good credit score.
Myth #2: You can’t fix your credit report after bankruptcy
After we help you through the bankruptcy process, we make sure you know to do the things you need to do to get good credit in three years. We also follow up with the credit bureaus after your bankruptcy is over to make sure your credit reports are right.
It is necessary to check your credit report after bankruptcy because major credit card companies try to leave bad marks on your credit report. They hope that these bad marks will cause trouble for people who filed bankruptcy, and they hope that consumers will pay the bankrupt debt to remove it. About 50% of our clients have this problem.
We invite all of our clients to visit us after the bankruptcy and we take action to make the credit card companies remove any bad marks from credit reports.
Myth #3: People who file for bankruptcy are financially irresponsible.
“It’s far more likely that people run into very serious personal problems in one of three areas: losing their job, going through a divorce, or suffering a serious illness,” says Walter W. Miller Jr., who teaches bankruptcy law at Boston University School of Law.
Long-term unemployment, the legal fees associated with divorce, the cost of running two households following a divorce, or the high cost of medical care have all driven well-intentioned Americans into bankruptcy. It really doesn’t take much of a bump in the road to send you into out of control debt.
We’ve helped thousands of honest, hard-working Dallas area residents get a fresh start. Sometimes bad things happen to good people, and we’re here to help if that happens to you.
Call us any time at 214-760-7777 and we’ll be happy to listen to your story and walk you through your options.