On behalf of Law Offices of Mark M. Kratter, LLC on March 27, 2013
Learning the truth about bankruptcy sometimes comes too late. A person might hear about its extraordinary benefits from a friend or acquaintance, but it could be too late if property and a home have already been lost to creditors. Hopefully, sharing accurate facts about this federal remedy will help get the information out to Connecticut residents who are facing overwhelming debt and can still benefit by filing for bankruptcy.
Many people are understandably reluctant to file a consumer bankruptcy. Anyone thinking about this remedy should first research all of the options, and make a choice based on accurate information. An informed choice will not rely on persistent bankruptcy myths that seem hard to die.
One major myth is decidedly untrue: when a person or a married couple files a bankruptcy they will never own a house or get credit again. Although a consumer bankruptcy can possibly be reported from seven to 10 years after it ends, most people will restore their credit far sooner than that. Furthermore, the elimination of unsecured debt such as credit cards will be total and complete by the end of the bankruptcy.
This means that one who has completed a consumer bankruptcy owes no unsecured debt at all, making the individual or married couple more suitably positioned to take on new credit than those who've held onto it for years without relief. That's consistent with the main purpose of bankruptcy law, which is to give a consumer a 'fresh start' by wiping the slate clean. Actually, for that very reason some people begin to receive invitations to apply for new credit while they are still in an active bankruptcy.
However, if there's a lesson learned from the seemingly unstoppable spiral of credit card debt, it's that a person should not be so wildly tempted again. Furthermore, one can keep a house and a car by reaffirming those loans and continuing to pay after the bankruptcy. If there's a second mortgage, it can in many cases be eliminated by a special bankruptcy procedure. Thus, a Connecticut resident filing for bankruptcy can in most cases, if desired, retain his or her house and car loans while at the same time emerging free of all credit card and other unsecured debt.
Source: Global Grind, "Wisdom Wednesdays with Lynn Richardson: Bankruptcy Myths," Kelsey Paine, March 6, 2013
