TOP 16 MYTHS ABOUT BANKRUPTCY
You know all those bad things
....you've always heard about bankruptcy.
Most of it is NOT TRUE....and I'll prove it
....right here...right now.
Here are the Top 16 Myths your creditors want you to believe
...and the reason why every one of them is NOT TRUE.
Myth 1: Under the NEW bankruptcy law, there is no more help.
Myth 2: Everyone will know you have filed for bankruptcy.
Myth 3: You will lose everything you have.
Myth 4: You will never be able to own anything again.
Myth 5: You will never get credit again.
Myth 6: Filing bankruptcy will hurt your credit for 10 years.
Myth 7: If you're married...both you and your spouse have to file for bankruptcy.
Myth 8: It's really hard to file for bankruptcy.
Myth 9: Only deadbeats file for bankruptcy.
Myth 10: Filing bankruptcy means you're a bad person.
Myth 11: Filing for bankruptcy will hurt your credit.
Myth 12: Even if you file for bankruptcy, creditors will still harass
you and your family.
Myth 13: If you file for bankruptcy, it may cause more family troubles
and may even lead
to
divorce.
Myth 14: You can't get rid of back taxes through bankruptcy.
Myth 15: You can only file once for bankruptcy protection.
Myth 16: You can pick and choose which debts and property to list in
your bankruptcy.
Myth 1: Under the NEW bankruptcy law, there's no more
bankruptcy and no more help (or it's too late to file).
Not True. In fact...nothing could be further from the truth. Sure you
heard it in the press, but it's just not true. The news media overcooked
the whole story. The truth is that you can do almost everything under
the NEW law that you could do under the OLD law. In some ways, the new
law actually increased the benefits of filing bankruptcy.
As it turns out...and you need to hear this...many clients are getting a
better break under the NEW law, than they would have received under the
OLD law.
Surprised? So were we, but it's the truth. Find out for yourself.
Just call toll free to 1-800-THE-DOGS to set up a totally FREE initial
consultation.
That NEW bankruptcy law: We Figured It Out.
Myth 2: Everyone will know you have filed for
bankruptcy.
Unless you're a prominent person or a major corporation and the
filing is picked up by the media, the chances are very good that the
only people who will know about a filing are your creditors and the
people who you tell. While it's true that your bankruptcy is a matter of
public record, the number of filings is so massive, that unless someone
is specifically trying to track down information on you, there is almost
no likelihood that anyone will even know you filed. However...telling
someone that someone else filed bankruptcy is good gossip...just like
telling a someone you heard so-and-so is getting a divorce. So...if you
don't want everyone you know to know you filed bankruptcy....you need to
keep the information to yourself. As for newspapers...my experience is
that most papers don't include information about who filed
bankruptcy.... and even if they did...think about it....who would be
interested enough to read that stuff.
Myth 3: You will lose everything you have.
Nothing could be further from the truth. The fact is....most people
who file bankruptcy don't lose anything.
First....while laws vary from State to State, every State has exemptions
that protect certain kinds of property. Using Texas as an
example.....there are exemptions to protect such things as your house,
your car, your truck, household goods and furnishings, IRAs, retirement
plans, the cash value in life insurance, wages, and personal injury
claims. In the rare situation where there is more property than can be protected by available exemptions...there
is Chapter 13. In Chapter 13...you can even keep this property by paying
a higher Chapter 13 plan payment.
Second.....as mentioned above (Myth 2)....filing bankruptcy does not
generally wipe out liens. Therefore...if you want to keep a car, truck,
home or business equipment that serves as collateral for a loan....you
need to keep paying on the debt. If you make these payments and have
exemptions to cover any value above what is owed....you can rest assured
you will be able to keep these items.
Myth 4: You will never be able to own anything
again.
A surprising number of people believe this....but this is completely
false. In the future...you can buy, own and possess whatever you can
afford.
Myth 5: You will never get credit again.
Quite the contrary. Filing bankruptcy gets rid of debt....and
getting rid of debt puts you in a position to handle more credit....and
this makes you look more attractive to would-be lenders. In my
experience.....unfortunately....it won't be long before you're getting
credit card offers again. I say "unfortunately" because I don't want you
to get right back in debt again. At first...the would-be lenders will
want more money down and will want to charge you higher interest rates.
However....over time....if you are careful, and keep your job, and start
saving money, and pay your bills, and do things that will put good marks
on your credit report....the quality of your credit will get better and
better. Generally...in my experience...if a client has not
re-established good credit in 18 to 24 months...sufficient to buy a car or
even a house....it's not because they filed bankruptcy. It generally
means that something else has happened after the bankruptcy to hurt
their credit.
Myth 6: Filing bankruptcy will hurt your credit
for 10 years.
Not true. You are getting 2 completely different concepts confused
with each other. You are getting the fact that bankruptcy is reported on
your credit report for 10 years mixed up with the effect that reporting
will have on your credit. Just because something is reported on your
credit report does NOT necessarily mean it will have a negative effect
on your credit standing.
First...let's get one thing out in the open. By the time you need to
make an appointment to see a bankruptcy attorney.....your credit is
already messed up or maxed out...or both. This being the case....you
have no credit for bankruptcy to hurt.
Furthermore...as I mentioned above...in my experience...if you have not
re-established good credit in 18 to 24 months after you file
bankruptcy.....most likely....it has nothing to do with the fact that
you....once upon a time....filed bankruptcy...and it certainly has
absolutely nothing to do with the fact that your credit history still
shows an old bankruptcy.
Myth 7: If you're married...both you and your
spouse have to file
for bankruptcy.
Not true. In many cases...where both husband and wife have a lot of
debt....it makes sense and saves money for them to both file....but it
is never a requirement under the law. We have many cases where only one
spouse has filed. The good news is that generally....if it makes sense
for both spouses to file together....they can both file for the price of
one filing.
Myth 8: It's really hard to file for bankruptcy.
No....it's not....at least not in the hands of an experienced
bankruptcy attorney. In the hands of an experienced bankruptcy
attorney...filing bankruptcy is easy. The decision to file may be
hard...but once the decision is made...the filing part is easy.
Myth 9: Only deadbeats file for bankruptcy.
Not true. Most of the people who file bankruptcy are good, honest,
hard-working people...just like you and me....who file as a last
resort....after months or years struggling to pay the bills that left
over from some life-changing experience, such as a divorce, the loss of
a job, a failed business venture, a serious illness, or some family
emergency...or because they honestly and mistakenly fell into debt at a
young age before they knew better...before they knew anything about
budgeting or how to manage money.
Myth 10: Filing bankruptcy means you're a bad person.
Not true. There's a reason over 1,000,000 Americans file bankruptcy
each year...and it's not because they're bad people. Lots of good,
honest, hard-working people fall on hard times. Let's face it....life
can be brutal....and sometimes...the money's just not there. The
bankruptcy law were created with this in mind...to make sure you have a
way....if need be....to get free from the burden of debt...so that
you...and your family....can have a second chance at a "fresh start".
Myth 11: Filing for bankruptcy will hurt your credit.
That's not true. Think about it. By the time you come to a
bankruptcy attorney....your credit is already either messed up or maxed
out. And if it's already messed up or maxed out....how can bankruptcy
hurt it?
The big surprise for my clients is when I tell them that filing
bankruptcy can actually help them re-build their credit. Bankruptcy gets
rid of debt....and getting rid of debt puts you in a better position to
handle new credit....if only someone will give it to you.
Therefore....bankruptcy is the first step in the process of re-building
your credit.
Myth 12: Even if you file for bankruptcy, creditors will still
harass you and your family.
This is NOT true. In fact, nothing could be further from the truth.
The minute you file bankruptcy, the Bankruptcy Court issues an order
telling all of your creditors to leave you alone. No more phone calls.
No more collection letters. No more lawsuits. No repossessions. No
foreclosures. Nothing. This order has a name. It is called the
"automatic stay"; and it is issued pursuant to 11 United States Code,
Section 362. The automatic stay prohibits you from any and all
collections actions. After you file bankruptcy, the creditor is not even
allowed to talk to you. In addition, the creditor must stop any
collection attempts already started. The automatic stay is very
powerful, and puts the full weight of the United States Courts to work
for you, to make sure your creditors leave you alone. If a creditor
violates the automatic stay, you have the right to bring the creditor
before the Court for Contempt of Court, and to be compensated
accordingly. Believe me, Bankruptcy Court Judges do not take kindly to
creditors who ignore the automatic stay, and these Judges have been
known to punish creditors severely. Very simply, once you file for
bankruptcy, creditors must leave you alone or suffer the consequences.
Myth 13: If you file for bankruptcy, it may cause more family
troubles and may even lead to divorce.
This is NOT true. Usually, it works just the opposite. Filing
bankruptcy is not the problem. The problem is not being able to pay your
bills. All good, honest, hard-working people feel a strong need to pay
their bills, and not being able to do so, causes them to feel tremendous
stress. Unless you do something to relieve this stress, the stress can
quickly build to the breaking point....the marriage breaking point.
Bankruptcy is designed to get you out from under the burden of debt, to
protect your property and to lower your stress level. If your experience
is like that of other couples, you will find that filing bankruptcy...
and lowering the stress level.... can be a crucial first step in
bringing the love and caring back into your relationship....which.....in
turn.....gives your marriage a fighting chance.
Myth 14: You cannot get rid of back taxes through bankruptcy.
We get rid of old "income" taxes for our clients all the time. By
"old"...I mean income taxes more than 3 years old. Under the law...there
are 3 or 4 qualifications that have to be met....but once these are
met....these taxes are gone. Please note: Filing bankruptcy does NOT get
rid of withholding or sales taxes...no matter how old they are.
Myth 15: You can only file once for bankruptcy protection.
The truth is....you can file and get a 'discharge' under Chapter 7
once every 8 years. As for filing a Chapter 7 after filing and getting a
discharge in Chapter 13, the wait is 6 years, computed from 'date of
filing' to 'date of filing'. As for filing a case under Chapter 13 of
the Bankruptcy Code....the wait is only 4 years after a prior discharged
Chapter 7 or 2 years after a prior discharged Chapter 13 case, computed
from 'date of filing' to 'date of filing'.
There is no required wait time between bankruptcy flings, if the prior
bankruptcy case was 'dismissed', as opposed to 'discharged', unless
there is a specific court order to the contrary.
Hopefully...however...you will never need to file more than one
bankruptcy.
Myth 16: You can pick and choose which debts and property
to list in your bankruptcy.
I'm sorry...but you cannot. Doing so would be against the law. Under
the law...when you file bankruptcy...you have to list all your property
and all your debts. Most people want to leave out a debt because it is
their intent to keep paying on it. The good news....on this score....is
that you can achieve the same goal, even though you have to list the
debt. If you want to keep paying on a debt...after bankruptcy....you
can. After bankruptcy....you can go back and pay anybody you want. In
fact...after you file bankruptcy....there are some debts you have to
keep paying on. For instance....if you have a car, truck or house
loan....even though you list the debt in your bankruptcy....if you want
to keep the car, truck or house....you have to keep paying on the debt.
More importantly....you need to know this. As long as you stay current
on the loan...and keep the property properly insured....you are
protected under the law .... and you get to keep the
property....because...under the law...the creditor is stuck with you and
can't do anything about it.
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