Myths of Personal Bankruptcy
Debunking the top six mysteries and myths about filing for bankruptcy
Take comfort in knowing that much of what you've heard about filing for bankruptcy is simply untrue. It's important for you to know the truth so you can get the help you need to rid yourself of debt. Here are some common myths about bankruptcy, with explanations why they are untrue.
- Under the new bankruptcy law, there is no more help.
- Everyone will know you have filed for bankruptcy.
- You will lose everything you have.
- You will never be able to own anything again.
- You will never get credit again.
- Filing for bankruptcy is expensive.
Not true. The 2005 Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) actually may increase your benefits from filing for bankruptcy. Many bankruptcy clients get a better break under the new law than they would have from the old law.
Not true. When you file for bankruptcy, the only parties that receive notice are your creditors, the bankruptcy court and the Internal Revenue Service. However, filing for bankruptcy is public record, so if anyone wanted to learn of your filing, he or she could do so. The important thing is for you not to slip and tell people who do not have a need to know.
Not true. Most bankruptcy clients don't lose anything. Every state has exemptions that protect certain kinds of property. For instance, in some states there are exemptions to protect such assets as your house, car, truck, household goods and furnishings, IRAs, retirement plans and wages, plus the cash value in life insurance and the damages you received in personal injury claims. There may even be a "wildcard" exemption per person that can be applied wherever you want it. In those rarer situations where you have more property than can be protected by available exemptions, there is Chapter 13. In Chapter 13, you can keep even this property by paying a higher Chapter 13 plan payment. However, filing bankruptcy does not generally wipe out or get rid of mortgages or liens against your property. If you want to keep a car, truck, home or business equipment that serves as collateral for a loan, you need to continue 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.
Not true, but a surprising number of people think it is. The truth is this: Once your debt is discharged, you can buy, own, control and possess whatever you can afford — a house, a car, a truck, equipment, household goods and other items.
Not true. In fact, the opposite is true. Filing for bankruptcy gets rid of debt. Getting rid of debt puts you in a position to handle more credit. This makes you look more attractive to banks, credit card companies and other lenders. But be wary of the credit card offers that may start to come your way again. It is important that you remain careful: Keep your job, pay your bills and do things that put good marks on your credit report. Do this and your credit rating will consistently improve over time.
Generally, if clients have not re-established good credit in two to four years, sufficient even to buy or refinance a house, it's not because they filed for bankruptcy. It generally means that something else has happened after the bankruptcy to hurt their credit.
Many individuals who have filed for bankruptcy buy cars and trucks almost immediately after they finish with their bankruptcies. A few clients have even managed to buy a car or truck while they were still in bankruptcy.
Not true. Although bankruptcy attorneys are required by law to collect all fees upfront, you have the option of including attorney fees in your bankruptcy filing as another debt. If you can hold off filing for a few months, you may have time to come up with the required fees and then file. Even when your case is not yet filed, you can still have an experienced bankruptcy attorney on your side.
Contact experienced bankruptcy attorneys now for your free consultation
Learn the truth about bankruptcy and how it can help you regain peace of mind. Call Jacoby & Meyers Bankruptcy Law and get on the road to a debt-free life. Your consultation with one of our bankruptcy attorneys is always free and always confidential. Get started today. Call us at 855.536.9231 or simply use the contact form on this page. The right choice in bankruptcy help today can make a major difference in building a better tomorrow.
Jacoby & Meyers Bankruptcy Law, with convenient locations throughout the United States, has helped more than 75,000 clients eliminate more than $500 million in debt. We look forward to helping you.