MYTH 9: My lender wouldn’t have approved the loan if I couldn’t afford it.

 

REALITY: Wrong. Some lenders are paid bonuses for lending you money up to and beyond your ability to repay. Ultimately, you are the only one to ensure that you do not get in over your head.

 

MYTH 10: If my debts get to be too much, I’ll just file bankruptcy.

 

REALITY: Bankruptcy is a very serious matter and should be a last resort, not an easy “out.” It is a legal case filed with the bankruptcy court that is a matter of public record, and it can be reported for the rest of your life if you apply for certain loans, life insurance, or jobs. Many people who filed bankruptcy wish they had tried other alternatives before filing. Once you file, you will always be “a person that filed bankruptcy,” and you can never take that back. Take a look at Chapters 20 and 21 for more information on bankruptcy.

 

MYTH 11: The credit card companies wouldn’t send me applications in the mail if

I couldn’t afford it.

 

REALITY: Wrong. The credit card companies are simply making you an offer based on mailing lists or research they have performed. It is your responsibility to determine if you can afford to accept their offer.

 

MYTH 12: Since I have no assets, the creditors can’t do anything if I don’t pay my bills.

 

REALITY: If you don’t pay your bills, creditors may sue you, obtain a judgment against you, then enforce that judgment by garnishing your wages or waiting until you have assets. Chances are that you won’t be broke forever, and creditors will wait for that day (while their interest is building). Although collection activity might currently be quiet, your account will most likely be sold to another agency and the collection calls will start again.

 

MYTH 13: Somewhere, there is a magic solution to my money problems.

 

REALITY: Wrong. Sometimes, you really do run out of good options, and you’ll have to choose between unpopular solutions. Unlike television or the movies, there is not always a happy ending.

 

MYTH 14: Everything is okay because I pay the minimum payment due each month.

 

REALITY: By just paying the minimum payment on a debt, you extend your payments for many years. If possible, send more than the minimum payment. If this isn’t possible, you are probably living close to the financial edge. What would happen if you were injured or sick and could not work? Would you be able to pay your bills if your spouse was suddenly out of work, or your company downsized and released you? Do you have any assets or cash reserves that you could fall back on? Simply being able to live from paycheck to paycheck is not a sign of financial wellbeing.