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Top 10 Myths About Bankruptcy

Myth #1: I'll never get credit again.
bankruptcy myths 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 lose 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 way for good people who are going through tough times to get some financial relief. Many times people have to file for Bankruptcy because they have unexpectedly become ill, gone through a divorce or lost their job. The slow economy and bad times that we all face today don’t make a person bad. Bankruptcy can provide the financial relief that good hardworking people need to get them through these difficult 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.

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