The Truth About Bankruptcy

"Bankruptcy. That word sends chills up the spine. If you're facing the prospect of bankruptcy or in the middle of it right now, you know it's a living nightmare. It can devastate your job, destroy your marriage and steal your peace of mind." Quote from Dave Ramsey

I find in this day and age, bankruptcy is often thought of as an "easy way out."  But I have personally seen the stress of going through a bankruptcy destroy lives, marriages, and families.  Bankruptcy should be avoided if at all possible. However, I realize that in some instances bankruptcy may be the only option.

Bankruptcy also destroys your credit. Dave Ramsey states that "Chapter 7 Bankruptcy, which is total bankruptcy, stays on your credit report for 10 years. Chapter 13 Bankruptcy, more like a payment plan, stays on your credit report for seven years. Bankruptcy, however, is for life. "

Want to purchase a home?  Another negative impliction arises when someone who has gone through bankruptcy wants to purchase a home. To qualify for a home loan using an FHA loan, the bankruptcy has to have been discharged for 2 years on a Chapter 13 or 4 years on a Chapter 7 bankruptcy.  To purchase a home using conventional financing, the bankruptcy must be discharged for 4 years.  After a bankruptcy, the prospective borrower must have either established new credit or have no credit at all in order to qualify.  There can be NO derogatory credit issues when a credit report is pulled.  Bankruptcy is NOT an easy way out.

According to an article written by Dave Ramsey, "Bankruptcy is listed in the top five life-altering negative events that we can go through, along with divorce, severe illness, disability, and loss of a loved one. I would never say that bankruptcy is as bad as losing a loved one, but it is life-altering and leaves deep wounds both to the psyche and the credit report."

If you are considering a bankruptcy or have gone through a bankruptcy, click on the link below for the "rest of the story."

Myth: I'll just file bankruptcy and start over; it seems so easy.

Truth: Bankruptcy is a gut-wrenching, life-changing event that causes lifelong damage.

The Truth About Bankruptcy