Top 10 Myths About
Bankruptcy:
Myth #: 1 I'll never get credit
again.
THIS IS
FALSE! Although the bankruptcy can stay on your credit report for
up to 10 years, you can start rebuilding your credit almost immediately.
In fact, many of our clients find it easier to get credit after their
Bankruptcy. Bankruptcy wipes out debt, which in turn helps your
credit score. Potential creditors know that you are no longer
responsible for the debts that were discharged through Bankruptcy. Most
creditors are much happier to extend credit to someone who has no credit
card or loan debt (even if they have been through a Bankruptcy) than to
someone who has huge loans and credit card debt that they are unable to
pay.
Myth #: 2 Everyone will know I have
filed for bankruptcy.
NOT TRUE! Bankruptcy is public record but unless you
are a movie star or a prominent official, people aren’t going
to be looking. Typically, the only people who are going to know are
those you tell and those who have access to the
bankruptcy court record system.
Myth #: 3 I'll never be able to own
property again.
FALSE! You will
get credit card offers and be extended credit right after the discharge
of your bankruptcy. If you want to purchase a home and have the
down payment and the income necessary to support the mortgage payments
there are many lenders out there who will be happy to finance you after
a Bankruptcy. In short, you will be able to
purchase whatever you can afford.
Myth #: 4 I'll lose everything I
own.
ABSOLUTELY NOT TRUE! Remember, Bankruptcy laws
were put in place to give people a FRESH START not to
punish them. Most people who file for Bankruptcy
keep all of their property and loose nothing except
their debts. "Exemptions" are the part of
Bankruptcy law that allow you to keep most items and
property that you own. Outside of bankruptcy you could lose your
property to creditors, but once you have filed for
bankruptcy you and your property are protected up to the
amounts allowed. An experienced Bankruptcy
Attorney will be able to advise you of the exemption laws in your
jurisdiction and help you determine if anything you own
or have an interest in might be at risk. Bankruptcy doesn’t always wipe out liens,
which means that if you want to keep secured items or property
(such as a car or home) you will most likely need to
continue making those payments.
Myth #: 5 Married couples must file
together,
NOT TRUE! You can file together or separately, that
is your choice. In many cases it makes sense for husband
and wife to file together, but in some instances the
spouse might not want to file. This is absolutely fine
and definitely allowed by the court. TIP:
If you are getting divorced and need to file
for Bankruptcy you and your spouse can usually save a
substantial amount of money in Attorney and filing fees
by filing for Bankruptcy together before the divorce is
final.
Myth #: 6 Bankruptcy can't get rid
of back taxes.
DEPENDS. Bankruptcy can get rid of income taxes that are
more than three years old. However, there
are several qualifications that have to be met in order
for these taxes to be wiped out. An experienced
Bankruptcy Attorney will be able to review your tax situation and advise you
as to which of your taxes qualify for discharge through Bankruptcy.
Myth #: 7 Only losers file for
Bankruptcy.
ABSOLUTELY FALSE!
Bankruptcy is a means for good people who are going through bad times to
get relief. Many times people have to file because they have lost their
job, gone through divorce, or experienced medical illness. The
slow economy
and bad times that we all face today don’t make a person bad. Bankruptcy
can provide the relief that good hardworking people need to get them
through these difficult financial times.
Myth #: 8 Creditors will harass me
if I file for Bankruptcy.
FALSE! Bankruptcy law provides for an automatic stay.
Simply put, as soon as your Bankruptcy is filed an automatic
court ordered protection is put on you and all of your
property. The law prohibits creditors from contacting
you during
the Bankruptcy. After the Bankruptcy is over,
creditors are prohibited by law from EVER trying to collect
for any of the debts that were discharged through the Bankruptcy.
Myth #: 9 You can choose what to
put into a Bankruptcy.
THIS ONE'S FALSE!
All creditors are equal under the law and must be listed in the
Bankruptcy. This means that you cannot leave the $500 you borrowed
from Uncle Bob out of your Bankruptcy and include the $7000 owed to
MasterCard. Your debt to Uncle Bob can't be treated any
differently in the Bankruptcy than debt owed to any other creditor.
After your Bankruptcy is over and discharged neither Uncle Bob nor
MasterCard can sue you or try to collect from you. However, you
are then free
to pay back Uncle Bob or even MasterCard if you wish. It's your
choice, not theirs.
Myth #: 10 I will be grilled in
court by my creditors.
NOT
TRUE! Most people who file for bankruptcy never go to court. They
do have to appear at a (341a) meeting of creditors, however, in most
cases no creditors show up. The main purpose of the meeting it to
answer questions from the bankruptcy trustee about your property or any
recent financial transactions you may have been involved in like selling
a home or car. He will also want to know if you have made any unusual
payment to your creditors or if you have paid any friends or family
members. This meeting is nothing to be afraid of and usually lasts less
than 10 minutes. When filing a Bankruptcy through THE LAW OFFICES OF
MARK L. MILLER your Attorney will make sure you are fully prepared AND
will attend this short meeting with you. |
