Let’s face it, the word “bankruptcy” does not exactly have a sterling reputation. Filing for bankruptcy has a negative stigma, even though it can help give you a fresh financial start. Because of its negative connotations, many people are afraid of the process.
It is wise to take your time before filing for bankruptcy, but there is no need to be afraid. In this post, we will address three common fears that many people have about bankruptcy.
1. Losing property
Many people fear that they will lose their material possessions when they declare bankruptcy. In fact, only 2 percent of all bankruptcy cases require individual filers to turn over their personal effects. Typically, a debtor’s property and equity in their real estate are exempt from confiscation.
2. Not qualifying for loans
When someone declares bankruptcy, is it even possible for them to qualify for a mortgage, a car loan or a credit card again? Yes, it is. There are plenty of lenders who will happily extend credit to you, sometimes as soon as your bankruptcy is discharged. After all, bankruptcy is not a punishment but a fresh start. You will very likely be able to buy a house, a car or get a credit card again.
3. Other people finding out
The thought of friends, colleagues and family members finding out is a major reason why some people fear declaring bankruptcy. But even though bankruptcy is a matter of public record, individual bankruptcy cases are very rarely discussed publicly unless they involve a noteworthy figure. The likelihood of anyone from your personal or professional life finding out is very low. Even if someone does find out, remember: There is no reason to be ashamed of declaring bankruptcy.