Bankruptcy Facts: Debunking Common Myths And Misconceptions
Bankruptcy does not enjoy a good reputation in our culture. Many people associate bankruptcy with failure. It’s laden with many misconceptions on top of social stigma. Unfortunately, the confusion and myths surrounding bankruptcy often prevent those who need it from getting out of debt.
At Borders & Gerace, LLC, we’re committed to setting the record straight with regard to bankruptcy. Our lawyers are passionate about helping people get the debt relief they need. With experience handling thousands of cases, they have seen firsthand the massive relief and positive change that clients experience when they get out from under debt through bankruptcy.
Below, we debunk some of the most common myths about bankruptcy.
Bankruptcy Myth #1: Bankruptcy ruins your credit for a decade.
Not true. While bankruptcy will affect your credit for about seven to ten years, you can start the process of rebuilding credit as soon as your debts are discharged. Bankruptcy gets rids of the unpayable debts that would keep dragging your credit down. Within a few years, your credit will likely have bounced back enough for you to purchase a house.
Bankruptcy Myth #2: You will have to tell everyone that you’re filing for bankruptcy.
Not true. Although bankruptcy court proceedings are public record, you are under no obligation to tell anyone, including your employer, that you are going through bankruptcy. Your communications with your lawyer are protected by attorney-client privilege. Put simply, no one will know about it unless you tell them.
Bankruptcy Myth #3: 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 #4: 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 #5: 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 #6: 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 #7: You will have to give up property.
Not true. You’re actually more at risk of losing your property to creditors, including getting your wages garnished, if you don’t file for bankruptcy. Through bankruptcy, you can generally get out of debt without having to give up any property. One type of bankruptcy – Chapter 13 – offers a way for you to keep your house.
Bankruptcy Myth #8: Both you and your spouse have to file for 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 #9: 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 & Gerace, LLC, attorney to see if your taxes can be eliminated in a bankruptcy filing.
Bankruptcy Myth #10: You can only file for 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 & Gerace, LLC, today to find out if you qualify for bankruptcy relief with a previous bankruptcy.
Bankruptcy Myth #11: 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 #12: 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 federal bankruptcy laws.
Bankruptcy Myth #13: 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.
Bankruptcy Myth #14: You can’t afford bankruptcy.
Not true. While there are some costs associated with bankruptcy, when you do the math, it often makes far more sense to pursue bankruptcy than to stay stuck in massive debt. The costs of bankruptcy will likely be a drop in the bucket compared to the amount of debt you have. When you consider that bankruptcy can prevent wage garnishment, car repossession and possible foreclosure, the value you get makes it completely worth it.
Our firm offers affordable fees and payment arrangements to make bankruptcy accessible to you.
Get A Free Case Evaluation To Discuss Your Bankruptcy Options
If you would like more information about the facts and myths of bankruptcy, call 216-435-5668 or contact us online today. We can offer you a free consultation. We have offices in Akron and Cleveland, and we handle bankruptcy cases throughout Ohio.
Why Choose Us?
- Free no-obligation consultation
- Consultations offered over the phone
- Focused on legal counsel for financial issues, such as bankruptcy, repossession and foreclosure
We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.