Why Bankruptcy isn’t as Scary as You Think

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Why Bankruptcy isn’t as Scary as You Think

The term bankruptcy usually comes with a negative perception. Many people automatically think financial ruin, business closures, and tarnished credit. And of course, no one starts a business or begins a career hoping for bankruptcy, but in reality, it can actually be a very positive thing for the filer. The problem is most people don’t know what bankruptcy actually entails. As Philadelphia’s top bankruptcy lawyers, we’re here to help you understand the best options when struggling with financial difficulties. This is why bankruptcy isn’t actually as scary as you think. 

Bankruptcy As The Solution

Filing for bankruptcy is a means to an end of those harassing creditor calls and threats. For many individuals, they’re the cause of profound stress and can be crippling to their daily lives. Not only do you want those calls to stop, but you want the debt to go away. Bankruptcy is often a way to satisfy any debts your owe to creditors, while protecting your property and assets. 

If you’re struggling with unsecured debts – credit cards, personal loans, collections, medical bills, etc. – equaling more than 20% of your annual income or you’re looking at years until you could pay them off, bankruptcy is a way to manage the money you owe.  And for businesses, it may be a way to keep your doors open. Bankruptcy could be your best opportunity to restructure your organization and debts to remain in operation. 

You Aren’t Going to Lose Everything

One popular myth of filing for bankruptcy is that the individual is going to lose everything in the process. In reality, it’s designed to help you eliminate your debts while retaining your most valued assets. Exemptions during filing can protect certain property like your home or your car, as well as other household items, from repossession.   

Your Credit Won’t Be Ruined Forever

It’s true that bankruptcy is damaging to your credit in the short term, but it won’t ruin it forever. In fact, filers typically see an increase in their scores of 50-100 points in the first year after filing. Since your debt is roughly 30% of your FICO credit score, by obtaining new credit accounts or reaffirming debts with low balances, you can start improving your debt to income ratio (DTI) almost right away. This is because you’ll have little to no debt compared to the new available credit limits. So ultimately, you’re looking at an opportunity to start fresh and re-establish good credit down the road. 

Your Reputation Will Remain Intact 

There’s more good news. Unless you’re a celebrity or notable public figure, your bankruptcy will not be disclosed in the media. You also aren’t forced to tell anyone outside of your attorney and creditors that you filed. So if you’re worried about damaging your reputation, that doesn’t have to be the case. Of course, there may be some obstacles you face when financial credit checks are required of you, but it won’t negatively impact your ability to get a job or take on a new role within your community. 

If you’re facing financial difficulties and are overwhelmed by harassing creditor calls, bankruptcy may be the best option for you. But the type of bankruptcy you choose will also have big implications on the outcome. That’s why it’s so important to have the knowledge of experienced bankruptcy lawyers helping you understand your options and get on the path to a fresh financial start. Contact us today for a free consultation. 

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