Myths about bankruptcy

September 19, 2011 2:04:45 PM PDT
Over the past two decades, bankruptcy rates among women have skyrocketed.

Nine out of 10 women are forced into bankruptcy by a job loss, medical emergency or divorce. Stats show 30-percent of those women are single moms.

Getting rid of your debt in one swift move may seem like a good idea, but not everything you've heard about the "b-word" is true.

First myth: Filing Chapter Seven bankruptcy will wipe out all your debts. Certain types of debts cannot be erased. Child support, alimony, government-issued student loans, and some legal settlements you've assessed are just a few.

Second myth: Filing for bankruptcy will help your credit rating. Your debts may go away, but a bankruptcy filing is the worst 'negative' you can have on your credit report. While other negatives stay on your report for seven years, bankruptcy can stay up to a decade.

Third myth: Filing for bankruptcy will eliminate your chances for future credit. Bankruptcy is not financial death. It won't be long before you're getting credit card offers again. They'll just be from subprime lenders that will charge much higher interest rates.