Chapter 11 Bankruptcy Myths
There’s a wealth of information online about how a Chapter 11 bankruptcy can affect your finances- and what you can do to prevent bankruptcy from permanently affecting your credit score. However, like many things on the internet, it’s important to consider the source of the advice, and whether or not that information can seriously hurt your credit rating. What’s the worst part of all this misinformation that’s floating around the web? A large portion of it comes from lenders themselves, whose mistakes can seriously cost you down the line should you find yourself torn between applying for a Chapter 11 bankruptcy, or just dealing with the debt yourself.
Here are the biggest myths about what will happen when you file for a Chapter 11 bankruptcy:
Your Credit Will Be Damaged
Let’s face it: if you’re staring at enough debt to make you even consider filing for a Chapter 11 bankruptcy, then your credit score is already shot. Many individuals tend to avoid filing for a Chapter 11 bankruptcy under the misguided belief that they can save what little standing they have with their creditors. However, if you’re dealing with the kind of debt that qualifies you for Chapter 11 in the first place, then filing for bankruptcy won’t have much of an effect on your credit score, as it’s already hit rock-bottom. Filing for bankruptcy gives you the fresh start you need, while struggling with your mountain of debt just delays the inevitable.
Bankruptcy Is A Permanent Black Mark
While lenders won’t exactly be jumping for joy when they see a Chapter 11 bankruptcy on your credit score, it doesn’t mean that this will last forever; in fact, lenders will start to regard your credit score as healthy within three to five years of responsible financial behavior after declaring the bankruptcy. If you can prove to lenders that you have your financial act together, then they’ll be more likely to work with you. Additionally, bankruptcies fall off of your credit score after seven years, so it’s not the “permanent black mark” that many creditors make it out to be.
Declaring Bankruptcy Is A Hassle
While filing for Chapter 11 bankruptcy as an individual is no walk in the park, this doesn’t mean that it’s impossible for consumers to do. If you’re considering filing for Chapter 11 bankruptcy, it pays to seek out the advice and counsel of a highly experienced and professional Chapter 11 bankruptcy attorney. He or she can work with you to collect the financial documentation you need, file a petition with your local bankruptcy court and work with your creditors to ensure that any payment plan works for you.
Don’t let popular Chapter 11 bankruptcy myths prevent you from taking control of your finances – contact your local bankruptcy attorney today to get the help you need.