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Bankruptcy myths that may keep you from financial freedom

On Behalf of | Nov 13, 2023 | Personal Bankruptcy

Filing bankruptcy is often an excellent option to reduce or eliminate debt. Starting over with a fresh financial outlook in Michigan using bankruptcy laws may be the key to securing monetary stability. The common dispelled bankruptcy myths below shine a light on how bankruptcy works.

Bankruptcy and credit score

Before filing for bankruptcy, you should know it will likely impact your credit score. Like most negative reports, a personal bankruptcy filing can decrease your score in the short term. However, with time, the negative report may have less of an impact.

In many cases, your bankruptcy will often no longer be on your credit score after about seven to ten years. In the meantime, you may have access to limited credit. However, the advantages of filing may outweigh the negatives if you cannot pay back your debts on time.

Debt and the Bankruptcy Process

The reality is that while bankruptcy is a useful tool to help you and your family get back on the right financial path, it does not guarantee that the entirety of your debt will go away. Many types of debt may remain after this process. Some unremovable debts include child support, spousal payments, and, in many cases, student loans.

Potential loss of assets

A top concern when filing for bankruptcy is the loss of personal assets such as a home or car. Despite these concerns, you should know that most bankruptcy filings will not lead to the loss of these assets. In fact, you can keep these items to prevent unfair challenges for you and your loved ones.

Bankruptcy is a tool to help those struggling financially. Understanding more about the bankruptcy process may help you to make better-informed decisions about your financial life.