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To file or not to file? Two tips for those considering bankruptcy

Many myths surround the bankruptcy process. Two examples include:

  • No one files for bankruptcy.
  • Bankruptcy hurts your credit score.

Debunking these myths can give you a better understanding of the bankruptcy process.

No one files for bankruptcy

People continue to struggle with the effects of the recession. If you file for bankruptcy, you are not alone.

Bankruptcy hurts your credit score

Although it is true that in the short term bankruptcy results in a hit to your credit score, it may be a better option for you than continuing to struggle with debt on your own. An approved petition for relief through bankruptcy results in the discharge of certain debts. This means you are no longer responsible for these debts. As a result, you can refocus your finances and work to rebuild the score immediately.

A recent story in NerdWallet highlights the possibilities. The piece notes that those who filed for relief through a Chapter 7 bankruptcy petition in 2010 had an average credit score of 538.2. After their case was discharged, (this takes approximately six months), their score rose almost 100 points to an average of 620.3.

Should I file?

Determining if bankruptcy is the best option for you is just the first step. Once you decide to move forward with bankruptcy, you need to consider which type is best for your situation. An experienced bankruptcy attorney can help you determine the best path to future financial security.

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