There is no need to fear personal bankruptcy

Getting into debt is surprisingly easy, while getting out of it can sometimes feel like an insurmountable task. Bankruptcy offers a smart, proven method for addressing impossible amounts of debt, but Maryland consumers are often hesitant to take this step. There is a lot of fear and misunderstanding that makes some people feel as though personal bankruptcy could not possibly address their needs.

Around 17 million U.S. households owe more in debt than what they earn or own. This comes out to about 14% of all households, but only about 1% of households file for bankruptcy annually. This means that every year there are another 13% of U.S. households who are struggling but do not get the help they need. Researchers even have a name for this group — the missing bankruptcies.

Behind these missing personal bankruptcies are people who are doing their very best to keep up with monthly payments. Some even turn to draining their retirement accounts in a desperate effort to stave off creditors. What these men and women may not realize is that they could have kept their retirement accounts if they had filed for bankruptcy.

It is a common misunderstanding that filing for bankruptcy means losing everything. The reality is that most people who pursue bankruptcy get to keep their homes, cars and other important properties. Someone filing for Chapter 7 bankruptcy might have to part with a few assets — not primary vehicles or residences — but if this is a concern, he or she could choose Chapter 13 bankruptcy instead.

Many people in Maryland believe that it is impossible to rebuild credit after filing for personal bankruptcy, but this is not true. Most people’s credit scores even begin to recover shortly after filing. However, it is also important to understand how filing for personal bankruptcy might affect one’s personal situation.