One of the most misunderstood concepts in personal or business finance is bankruptcies. Unfortunately, many people will make costly mistakes, because they did not learn the facts about bankruptcies. Below are some of the most common misconceptions and how to avoid them.
Misconception #1: Large Debt = Bankruptcy
My job is to provide legal counsel for those who are considering getting out of their debt when they’ve amassed large sums of debts. Whether you are a business owner or an individual/family looking to eliminate your debt, I can help determine if your situation allows you to enter into bankruptcy. If not, then you’ll want to look at other possible solutions for your debt to income ratio.
Misconception #2: Bankruptcy Kills Your Chances of Ever Getting Credit Again
Although bankruptcy used to be the death knell of your credit, times have changed. You can expect your average score to only go down about 130-150 points. While that sounds like a lot, the long terms effects are not as devastating as they sound. Remember, the average Chapter 7 bankruptcy is removed from your credit history after 7-10 years. For many people, they can be eligible for loans after a bankruptcy if they maintain good credit.
Misconception #3: You’ll Lose Everything You Have
Why do most people fall for this misconception? Because they believe that their ‘stuff’ is worth more than it actually is. In Chapter 7, clients rarely lose anything. You home, cars, personal property, jewelry, retirement plans and all other assets are almost always protected.
Misconception #4: Bankruptcy Will Wipe Away All of Your Debt
The good news is a large portion of your debt is wiped away during a bankruptcy. But before you bring the total balance to zero, you need to remember that some debts are not forgivable. The most common debt among these is student loans. In most cases, I can help you relieve your medical debt, credit card debt, personal loans, and other miscellaneous forms of debt.
Let Me Help You Work through Your Bankruptcy
Before you attempt a bankruptcy, contact me! I specialize in both Chapter 7 and Chapter 13 bankruptcies for clients in Minneapolis and St. Paul, Minnesota. Give me a call today at 651-454-0007 for a free consultation.