Debunking the myths put forth by “debt relief” companies

Myth (Sphinx)
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While surfing the internet looking for information on Chapter 7 bankruptcy, you may come across articles saying that you should not file for bankruptcy. These articles will cite a myriad of reasons: You’ll ruin your credit score, you won’t be able to get a new job, you won’t be able to rent another apartment, and utility companies will make you put down a deposit.

I say, don’t believe the hype.

You need to do what’s right for you. If filing for Chapter 7 bankruptcy turns out to be the right thing for you, then do it. Don’t let the naysayers get in your way.

Because here’s the thing: Each and every person who is having problems with debt needs to do their own analysis, preferably after consulting with one or more professionals, to determine whether Chapter 7 bankruptcy is right for them. Blanket negative statements about the evils of bankruptcy don’t help with your analysis.

Let’s look at these bankruptcy evils one at a time:

You’ll ruin your credit score. Seriously, folks, if you’re having bad debt troubles, don’t you think your credit score has already taken a beating? Maybe it hasn’t – but you’re likely in a situation where you are just starting to have trouble paying your bills and the troubles haven’t hit your credit report yet.

But if you allow the debt troubles to continue without taking some decisive action, your credit score will eventually go down. Might as well do something about the debt that you can’t pay sooner rather than later, so that you can get to a point where you can start to build up your credit score again, if it’s important to you.

You won’t be able to get a new job. Yes, many employers run credit checks on prospective employees. But many employers do not. Sometimes it depends on what industry you are in. Trying to get a bank job? Banks will probably run credit checks on prospective employees. But many “mom-and-pop” small, non-corporate employers do not. In other words, this is a factor you should consider, but it may not be the end all, be all factor that decides whether or not you file.

You won’t be able to rent an apartment. Here again, some landlords run credit checks and some do not. You probably won’t have your pick of every single new apartment to move into, but you wouldn’t have anyway, because some apartments rent for more than you can afford. This factor depends a lot on what’s available in the area where you want to live. So it’s something to consider, but it’s not the only factor (and not even a huge one, at that).

Utility companies will make you put down a deposit. Utility services cannot be cut off because you filed for bankruptcy. If you owe a past debt to a utility, then you may have to put down a deposit after you file. This is why it’s a good idea to be current on your utility bills prior to filing for bankruptcy.

If you’ve already finished with a bankruptcy, you may have to put down a deposit for a utility company in the future after you move and try to get utilities. But this can happen even without a bankruptcy on your record – for example, if you move to another state and start service with a utility company you’ve never used before, they might ask you for a deposit just because you’re a first-time customer. If you’re concerned about this, you may want to try renting an apartment that has utilities included in the rent.

Bottom line, the evils of bankruptcy are not evils at all – and they certainly should not be what keeps you from filing.

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2 Responses to Debunking the myths put forth by “debt relief” companies
  1. debt relief
    September 24, 2009 | 5:59 pm

    SEttling your debts is a great option. It’s not for everyone though. Do your research first.

  2. debt relief
    September 24, 2009 | 10:12 pm

    Thanks for the info!

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