Bankruptcy Facts and Myths
Bankruptcy Myth #1: Filing for bankruptcy hurts your credit for 10 years.
Not true. Bankruptcy stays on your credit about 7 to 10 years. Although the bankruptcy will stay on your credit, you can start rebuilding your credit once your bankruptcy is discharged, which is typically three months after you file in a Chapter 7 case. Continuing to pay your house or car payment on time can help you re-establish your credit. Many people are able to purchase a house two years after a bankruptcy discharge.
ankruptcy Myth #2: Everyone will know you filed for bankruptcy.
Not true. Bankruptcy is public record, but unless you are a prominent official in society, people aren't going to go looking. The only people who are going to know are those who you tell and those who have access to the bankruptcy court record system. Some people think that newspapers carry bankruptcy filing information, but in most areas, this is simply not true.
Bankruptcy Myth #3: There is no help with the new bankruptcy law.
Not true. The bankruptcy reform act changed only the method in which debtors qualify for the different types of bankruptcy. It doesn't prevent people from filing and in most situations, people are still able to get the same relief now as before the law changed.
Bankruptcy Myth #4: You are a bad person for filing bankruptcy.
Not true. There is a reason that over one million people file for bankruptcy each year and it is not because they are bad people. Bankruptcy is a solution to help good people go through a tough financial time. It provides hard working people with the fresh start they deserve but are unable to obtain.
Bankruptcy Myth #5: You can pick and choose what to put into bankruptcy.
Not true. You do have to list all of the debts that you owe and the property that you own. You cannot discriminate between creditors, even if you want to keep paying them. It is good to want to continue paying creditors, but it is still mandatory to include the debt. If you feel like paying it after the bankruptcy, you can, but you will not be obligated to.
Bankruptcy Myth #6: It's hard to file for bankruptcy.
Not true. There is a lot of paperwork involved, but having a skilled attorney makes the process much smoother. Filing bankruptcy is even electronic these days, which minimizes paperwork on your part.
Bankruptcy Myth #7: You will never be able to own property again.
Not true. You will get credit card offers and be extended credit right after the discharge of your bankruptcy. There are also creditors that will lend to you while you are in bankruptcy. You will be able to purchase whatever you can afford.
Bankruptcy Myth #8: You will lose everything you own.
Not true. Bankruptcy allows you to keep your property. Outside of bankruptcy, you could lose your property to creditors, but once you have filed for bankruptcy, you and your property are protected. Laws that allow you to keep property vary from state to state and you should consult an attorney in your area to properly advise you of the laws in your jurisdiction. Bankruptcy doesn't always wipe out liens, which means if you want to continue to keep the property, you will need to continue to pay the lien.
Bankruptcy Myth #9: Both you and your spouse have to file bankruptcy 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.
Bankruptcy Myth #10: You can't get rid of back taxes in bankruptcy.
Depends. Some clients are able to eliminate income taxes in bankruptcy if the taxes meet several conditions. Speak with a Borders and Gerace attorney to see if you taxes can be eliminated in a bankruptcy filing.
Bankruptcy Myth #11: You can only file bankruptcy once.
Not true. You can file for bankruptcy relief more than one time if you meet certain conditions. Getting the wrong advice may prevent you from seeking bankruptcy relief when it is appropriate. Contact a Cleveland bankruptcy attorney form Borders and Gerace today to find out if you qualify for bankruptcy relief with a previous bankruptcy.
Bankruptcy Myth #12: You can never get credit again.
Not true. You will start establishing credit from day one. Bankruptcy wipes out debt, which, in turn, helps your credit score. By making timely payments on the property that you choose to keep also shows a record of good credit. You will be able to get credit as soon as your bankruptcy is discharged and sometimes sooner.
Bankruptcy Myth #13: Creditors can still harass you if you file for bankruptcy.
Not true. When bankruptcy is filed, automatic protection is put onto you and all of your property instantly. Creditors are not allowed to contact you for any reason, which includes calling or even billing you. If they persist in harassing you, you do have remedies available through the Federal Bankruptcy laws.
Bankruptcy Myth #14: Filing bankruptcy causes more family trouble and divorce.
Not true. Bankruptcy eliminates debt eliminating financial stress. Filing bankruptcy is the solution to the problem, not an additional problem. Although making the decision to file bankruptcy might be difficult one, the relief provided will lift a huge weight off you. The absence of financial stress will give your relationship a fighting chance.
If you would like more information about the facts and myths of bankruptcy, call 216-766-5704 today. We can offer you a free consultation!