This is addressed in Bankruptcy Myth #3 above, but it is worth noting where this myth comes from. Chapter 7 Bankruptcy stays on the public records part of your credit report for 10 years, and Chapter 13 for 7 years. This myth derives the wrong lesson from the fact of the public records last 10 or 7 years.
It is your credit score that most lenders look at to determine the likelihood of your repayment, not any particular fact contained on your credit report. I have had my clients buy new houses with their credit two years after bankruptcy on numerous occasions.
They have had to disclose their bankruptcy filing to the lenders that gave them their mortgages. In an economy where on average about 1 million middle class people are forced to file bankruptcy they are too large a force to be ignored in the market.
Banks would like to have you believe that those who file bankruptcies are shunned for years because they hope to dissuade people from filing who are the basis of some of their most lucrative profits. But when those same customers file bankruptcy it doesn’t take long before the lure of those profits have the same banks welcoming back their most profitable customers. Don’t play the credit card game with them again. They will win again because the numbers are stacked in their favor. Just use your good credit once you get it again very sparingly and carefully.
Top 10 Myths About Bankruptcy
- Debt consolidation is as good as bankruptcy
- Everyone will know you filed bankruptcy
- You will never get credit again
- Filing bankruptcy will hurt your credit for 10 years
- Only deadbeats file for bankruptcy
- Your property will be sold by the bankruptcy trustee
- You have to hide assets to file bankruptcy
- It is expensive to file bankruptcy
- It is hard to qualify to file bankruptcy
- Taxes are not dischargeable in bankruptcy
