Should You File Bankruptcy?

Free Answers From Consumer Protection Group Bankruptcy Law Firm

Everybody agrees that 2020 has been a very difficult year. Businesses have closed. Jobs have been lost. For a lot of people, the debt keeps piling up. So if you’ve found yourself struggling to keep up with the bills, we want you to know that it’s not your fault.

I also know that you probably have questions about whether filing bankruptcy may be a good solution. That’s why this article you’re about to read will answer some of those questions, such as:

1 - Should I file bankruptcy?

2 - What’s the worst that can happen if I need to file but don’t?

3 - What will my life be like after bankruptcy?

4 - What other options do I have?

5 - How can I afford to file?

6 - What will people think of me?

7 - Will I be able to buy a house?

8 - Will it hurt my credit score?

You will likely be very surprised when you learn the answers to some of those questions after reading every last word of this article.

So let’s dive in. . . 

When I file bankruptcy, will it hurt my credit score?

The first thing you need to know is that bankruptcy almost always increases your credit score as soon as your debts are discharged (extinguished).

This is totally backwards to how most people think. Most people are wrong. They think bankruptcy hurts your credit. It doesn’t hurt your credit. It actually helps your credit. . . a lot!

It’s true. The sooner you decide to file bankruptcy, the sooner your credit score improves. I know it sounds backwards. But ask anybody who has filed. They’ll tell you it’s true. Almost always, filing bankruptcy improves your credit score. Period.

Will I be able to buy a house after bankruptcy?

Yes. In fact, you only have to wait for 2 years before you can buy a house. The bankruptcy might stay on your credit report for 7 years. But it won’t keep you from buying a house after 2 years have passed. Most people think you can’t buy a house after filing. Well I’m here to tell you that you can. All you need to do is keep a good “debt to income ratio” for 2 years and you could be eligible. And that shouldn’t be difficult to do because filing bankruptcy generally extinguishes all of your debt up to the date you file.

What will people think of me?

So many people delay bankruptcy just because they’re afraid of the stigma. Listen. . . other people’s opinions are worthless. You can’t deposit them in the bank. You can’t pay rent with them. They won’t keep you warm at night. They’re totally worthless.

Besides, if somebody thinks less of you for doing what is right for you and your family, then they weren’t your friend anyway. And you should get them out of your life right along with all that debt. You’ll be richer and happier when you do.

If that’s not enough for you, remember that you don’t have to tell anybody. Yes it’s “public record”, but nobody is reading the newspaper anymore. When is the last time you heard of somebody going out of their way to see who filed? Exactly. It’s never happened. If you don’t tell them, they won’t know.

How can I afford to file?

The truth is, if you’re wondering how you can afford to file, that’s exactly why you can’t afford not to. If you’re struggling to put together the attorney’s fee, it’s because the credit card companies are sucking every last hard earned penny out of your wallet. Once you stop the bleeding, there’s enough left over to pay the one-time fee. That fee doesn’t charge interest either. It’s one and done. Over. Then the financial bleeding stops.

Do I have any options other than Bankruptcy?

Right now we need to talk about two very misunderstood “alternatives” to bankruptcy. You will find both are generally poor choices.

Those two choices are debt settlement and credit repair. For both of those options, beware!

Debt settlement companies are “for-profit” companies that claim they can eliminate a consumer’s debts by negotiating settlements with creditors that are a mere fraction of the consumer’s outstanding balance.

Most of these companies charge hefty fees and accomplish little to nothing for consumers. Yes, you read that right. Many debt settlement companies make promises that they simply cannot keep and leave consumers in a worse financial position than when they began.

These companies advise consumers to stop paying debts and, instead, to place their money into a savings account so that enough money will accumulate to allow a settlement offer to be made to creditors.

However, most consumers who sign-up with the debt settlement companies find the companies’ promises are empty. Creditors are under no obligation to settle for less money than they are owed and, often, they refuse to do so. During the time the consumer was putting the money into the savings account rather than making a payment, their credit score continued to go down as a result of the non-payment to the creditors.

So why would you pay a debt settlement company just to be told no anyway?

Consumers who follow the debt settlement companies’ advice usually find themselves subject to creditors’ collection efforts, including lawsuits, phone calls, and threatening letters. All while the debt settlement company still takes their fee. 

You might think “there must be a better option than debt settlement”, but credit repair doesn’t do much good either. A credit repair company is an organization that offers to improve your credit in exchange for a fee. The companies often promise to handle all the heavy lifting of working with the credit reporting agencies.

Credit repair organizations are different from credit counseling agencies, which are typically a free resource from nonprofit financial education organizations that review your finances, debt and credit reports with the goal of teaching you to improve and manage your financial situation.

According to the Federal Trade Commission, the credit repair industry is loaded with scams. To help avoid scammers, it’s important to research any credit repair organization before agreeing to work with it.

Many of these companies will simply provide you a form letter to send to the big 3 credit reporting agencies and dispute every debt listed on your report and wait to see if anyone replies. Under the rules, if the creditor does not reply within a certain amount of time, then the debt must be taken off of your credit report. Sounds good, right?

While this process is supposed to be reserved solely for disputing debts that are reported improperly, many credit repair companies have you dispute all of them knowing that some creditors will not respond and, therefore, your credit score will improve. Frankly, it does little to nothing to improve your credit.

Can you see now why so many people choose to file bankruptcy instead of getting ripped off by debt settlement and credit repair charlatans?

What’s the worst that can happen if I need to file but don’t?

Well, the worst that can happen is very scary. The worst case scenario is you fall so far behind on your bills that your creditors sue you. You get served court papers in person, and when a judgment is entered against you at court, the creditor can then garnish your wages and even take the cash from your bank account without your knowledge! 

If they garnish your bank account, it gets pretty ugly. Let’s say you’ve got $3,000 in the bank for the month to pay rent, drive to work, feed your kids etc. And you owe the credit card crooks $6,000. With a garnishment, as soon as that $3,000 hits your bank, they can take it ALL out! And there’s NOTHING you can do about it!

It’s a worst case scenario nightmare. And frankly, it’s exactly why so many people choose to file bankruptcy. Because filing bankruptcy may not be fun, but it’s a whole lot better than getting sued and having your bank account sucked dry.

What will my life be like after bankruptcy?

You will be pleasantly surprised at how much extra money you have! The truth is, once those credit card bills finally stop, things start to get much easier in your life. You’re not wondering who you have to pay first, or who will be calling or sending you harassing letters. You’re not forced to live paycheck to paycheck anymore. You’re done with the headache of finding too much month at the end of your paycheck. It all gets easier. 

That said, you’ll still need to work hard of course. And it’s a great opportunity to start the very important habit of saving your money.

Should I file bankruptcy?

So here we have the final question. Should I file bankruptcy?

The best way to answer that question is to take our free “is bankruptcy right for me” quiz. Once you take this quick and easy bankruptcy readiness quiz, you’ll find out if you qualify for bankruptcy, how much you could potentially save, and whether or not you really should file. 

Yes. You’re just one quiz away from all the answers you need and a totally new financial life. 

You want to take that quiz right now.