Many times, what holds people back from filing a Chapter 7 bankruptcy in Louisville isn’t based on what they know about the process.
Rather, it’s based on what they may have heard about the process second or third-hand, usually from those who haven’t been through it. Unfortunately, there is a lot of misinformation out there. That’s worrisome because there is often so much good that can come of a bankruptcy filing.
For many people, the only regret they express is that they didn’t initiate the process sooner.
Just as an example: Many people erroneously think that if they stay current on their payments prior to the bankruptcy filing, they will ensure a higher post-bankruptcy credit score. While this would seem logical, in reality, having a positive pre-bankruptcy credit score won’t do a great deal to boost your score post-bankruptcy. So if you’re killing yourself trying to make those payments now, only to file for bankruptcy within a few months, the ultimate reward is negligible. You will have lost more money and delayed your ultimate recovery.
Perception of recovery time is another issue that often holds people back from initiating a Chapter 7 filing. We have often heard it repeated that all of your bankruptcy information is going to be stuck on your credit report for the next decade. This is false. Yes, there will be a public record of your bankruptcy available for the next 10 years. However, all other references to bankruptcy on your credit report are going to be erased after 7 years, sometimes even earlier. You can expedite your credit score boost by staying current on your post-bankruptcy payments and being smart with how you manage your credit going forward.
This leads us to the next point, which is the belief that your credit score is going to be low for those entire seven years that the bankruptcy remains visible on it. Granted, you are not going to have a high score right out of the gate in the immediate aftermath of a bankruptcy. However, it is not unheard of for people to have scores of 700 or higher in just four or five years. The key is going to be on-time payments and maintaining low balances on credit cards (think 25 percent of the total credit limit).
You will also want to bear in mind that not all bankruptcies are created equal. Often the impact to your credit score is going to depend on a number of factors. These will include the amount of debt that was discharged and the negative-to-positive ratios on your account. So let’s say for example your debt total was relatively low and was spread out over a handful of creditors. That will mean your post-bankruptcy credit score is going to likely be higher than someone who had a substantial amount of debt and dozens of creditors. This is not to say that the person in the former scenario shouldn’t have filed, just that they may find themselves in a better position post-bankruptcy.
To be sure, you don’t want to dive into a bankruptcy without careful consideration. But you need to make sure the decision is thoroughly informed. Meeting with an experienced bankruptcy attorney can help you properly weigh your options.
If you need to speak to a Kentucky bankruptcy attorney or Louisville foreclosure defense firm, contact the Schwartz Bankruptcy Law Center at 866-270-4495 for a free and confidential consultation to discuss your rights.
5 bankruptcy myths debunked, Sept. 4, 2013, By Barry Paperno, Credit.com
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Louisville Bankruptcy Filings Frequently Stem From Divorce, Sept. 5, 2013, Louisville Bankruptcy Lawyer Blog