Bankruptcy Fears and How to Overcome Them
Posted on: 14 May 2020
Share
It's only natural to feel a bit of trepidation at the thought of declaring bankruptcy. It's a major legal action and should be taken seriously. Just don't let your fears about the aftermath to get the best of you. Read on to find out how you can overcome those negative thoughts and prepare yourself for the coming fresh start you need right now.
Fear of High Income
When you file for chapter 7 bankruptcy, you'll encounter some unique situations. To help ensure that well-to-do filers aren't using bankruptcy as a way to get out from under unwise spending habits, the means test was added to the paperwork.
This test comes in two parts and is a check of income. The first part asks you about income for your household. If your income is below the state median, you don't have to complete part two. If your income is above the median, you'll have to explain why you still need to file for bankruptcy. You might, for example, show that you have a higher-than-usual mortgage payment or other bills that may not go away with a bankruptcy filing.
If your income is higher, talk to your bankruptcy lawyer for advice and find out if you can find enough income deductions to make it happen.
Fear of Never Being Able to Rent a Home
If you are not a homeowner and expect to move again, this fear might cause considerable anxiety. In most cases, landlords and property managers are more concerned about your spending habits after you file than bankruptcy. Very few will deny a rental for that reason alone. In many cases, you should be out of bankruptcy (have a completed petition) before you try to rent, however.
Fear of a Ruined Reputation
While a federal bankruptcy filing is public knowledge, very few people will come under the scrutiny that a politician or celebrity might. Anyone that asks for a credit check will know but few others will know or care. You might also find out that others have sought debt relief just like you have and that you are far from alone. As for employers, many prefer that employees who work around sensitive financial information have as little debt as possible and therefore don't use a bankruptcy filing alone as an instant disqualifier.
Fear of No Credit
A bankruptcy filing, when brand new, may create issues when buying a home or vehicle. That is probably due more to the lack of credit listed than the federal notation, however. As time goes on, most filers are able to slowly and carefully accumulate enough credit card debt to show auto loan and mortgage lenders that you do know how to handle debt and are worthy of a loan. To help ensure a loan approval, pay your bills on time, don't go overboard with credit use, and save up as much as you can for a down payment.
To find out more, speak to a chapter 7 bankruptcy lawyer.