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5 Bankruptcy Myths You Should Not Believe – Part 2

5 Bankruptcy Myths You Should Not Believe – Part 2

On our last entry a few hours ago, we discussed the first couple of myth related to bankruptcy that a lot of people tend to believe are the cause for filing for it.

While reviewing them, we discovered that, contrary to what most people believe, bankruptcy is not only caused by the people’s irresponsibility when it comes to repaying their personal loans, but that there are countless other circumstances that can force people to file for it.

Let’s keep looking at the remaining myths that people usually believe are the reasons behind bankruptcy and how what is really behind them.

3. Since your will file for bankruptcy, then better spend as much as you can so you won’t have to pay that back

According to most bankruptcy lawyers and financial authorities knowledgeable on the matter, there are a lot of people who firmly believe that they can freely charge up their credit cards with several expenses right before filing bankruptcy so those debts are discharged as if they were unpaid personal loans. However, these people might be surprised to learn that courts all over the country are ruling this behavior as fraud and can even penalize everyone who does it. Just like leaving a personal loans unpaid.

4. Bankruptcy can ruins your credit score permanently

This is perhaps one of the most widely spread myths about bankruptcy. However, a lot of people who file for it is almost shocked to see they start getting credit card and personal loan offers in the mail very fast and often. Even if most of the credit card offers that arrive are for secured credit cards (the ones that require a previous deposit) and are of low limit, having offers like these arrive even just a month after filing for bankruptcy can be encouraging for those people who really thought they were financially ruined.

In these scenario, the best thing that anyone who previously filed for bankruptcy can do is to accept one of these secured credit cards and to start making using it in normal fashion while at the same time making sure to be up to date with their payments, which will help them rebuild their credit tremendously. In fact, it wouldn’t be strange to receive a regular credit card or personal loan between six to 12 months into after repaying your installments on time due to an improvement in your credit score.

Additionally, everyone who filed for bankruptcy should also make sure that everything that should have been discharged has been marked as discharged, so as to not have their credo score affected negatively, as if they had failed to repay a personal loan.

5. Bankruptcy can get rid of all financial problems

Depending on which kind of bankruptcy one files for, only certain debts and personal loans will be discharged while others might only reduce or reorganize personal loan debts. But in no case is any bankruptcy an easy way out. In fact, there are many kinds of bankruptcy filings that end up with people losing their property or keep making payments for their personal loans for years to come.

In addition to that, people planning on filing for bankruptcy should know that the process is not cheap, and fees can be as high as almost $2,000. In addition to that, anyone considering filing will have to attend several credit counseling sessions in which they will be advised on other ways in which they can negotiate their personal loan debts.