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Why do people fear bankruptcy?

| Feb 16, 2021 | Bankruptcy

Many people in Massachusetts avoid filing for bankruptcy because they fear that it will ruin their lives. Due to popular misconceptions about bankruptcy, some people believe that they will lose all their property or never be able to take out a loan again. In fact, bankruptcy isn’t a punishment–it’s a tool that helps you get your life back together.

What are some reasons that people are afraid of bankruptcy?

When you file for consumer bankruptcy, your credit score takes a hit. Some people assume that they won’t be able to take out a loan or use a credit card for the next 10 years. Actually, you can take out a line of credit and start building up your credit score right away. Some lenders will only give you a secured loan at first, but once you’ve paid it off, you might be able to advance to an unsecured loan. Many creditors have no problem lending you money because they know you can’t file for bankruptcy right away.

Many people also fear losing their property. While you might have to sell off some properties to pay your debts, essential properties like homes and vehicles are usually exempt. The government won’t expect you to sell your house and live off the streets to pay off your mortgage. Your consumer bankruptcy attorney could help you figure out which exemptions you qualify for.

How do you file for bankruptcy?

If you’re not sure if bankruptcy is the right choice, you could always talk to an attorney first. They might be able to answer your questions and suggest other ways to find relief. When you decide to file for bankruptcy, your attorney could help you gather your paperwork and avoid predatory creditors.