There are many myths surrounding bankruptcy, and as a bankruptcy attorney I have heard them all. But I can tell you that most of these are, in fact, just lies and misconceptions. Lies that are designed to scare people from getting rid of their debt and getting the financial help they so desperately need.
Clients often come into my office with their own preconceived notions of how bankruptcy will affect the rest of their lives. Will they ever be able to get credit, again? Will they be able to keep their home, their car or ever purchase a home? In this blog, we will address some of the most common lies and misconceptions surrounding bankruptcy.
Myth #1: My Credit Will Be Ruined Forever.
The fear of the unknown keeps many people from filing for bankruptcy. One of those fears involves the impact bankruptcy will have on your credit score. If you are already behind on credit card payments, mortgage payments or are being threatened with lawsuits and wage garnishment, bankruptcy can only help improve you credit by eliminating debts you can no longer afford and getting you back to paying your bills on time and in full by giving you a financial fresh start. My clients get credit card offers within 6 months after the bankruptcy case is over. I know because that is what happened to me when I filed bankruptcy 10 years ago. Just make sure you do not sign up for the bad credit cards like First Premier, Orchard Bank, Merrick Bank, Credit One, etc. Sign up for the Capital One they will most likely offer you.
Myth #2: I Will Lose Everything.
False! Most of our clients do not lose anything, thanks to Florida’s generous bankruptcy exemptions. The majority of Chapter 7 cases are ‘no-asset cases,’ which means you do not have to turn over any property or cash to the bankruptcy trustee. Your home, car, retirement savings, social security, pension, and more- are all protected in bankruptcy.
Myth #3: It Is Better to Just Pay Off My Debt.
Many people think that it is better to just keep paying their debts rather than file for bankruptcy. This is oftentimes just delaying the inevitable. If the majority of your debts are unsecured consumer debts, such as credit cards or medical bills, these debts will end up being discharged in a bankruptcy in the end. If your debts are more than 50 percent of your annual income, and you do not see yourself paying off your debts in the next five years, bankruptcy may be the best option for you. The worse thing is when clients come in an see me after they have exhausted their 401K when they should have came in and saw me the day they even considered pulling our retirement money to pay back debts.
Myth #4: Everyone Will Know That I Filed for Bankruptcy.
Unless you are famous, only your creditors (and people you personally tell) will know that you filed for bankruptcy. While it is a matter of public record, people will have to go out of their way to find it.
Myth #5: Bankruptcy Has the Same Effect on All Filers.
Bankruptcy does not affect the credit scores of all consumers in the same manner. How your credit score is affected depends on many different factors, including the type and amount of debt being discharged, as well as how many negative and positive accounts you have on your credit report.
Myth #6: Filing for Bankruptcy Is Difficult and Takes A Long Time.
Hiring an experienced bankruptcy attorney to file your case can make the process rather painless and run quite smoothly. Chapter 7 bankruptcy cases can be completed in approximately three months. Our firm has eliminated close to a billion dollars of debt for our clients, making us one of the top twenty filers of bankruptcy in the nation. We take pride in the results we have obtained for our clients and giving a fresh financial start to those who need it the most.
Myth #7: If You Are Married, Both You and Your Spouse Have to File for Bankruptcy.
False! While it makes perfect sense for spouses to file jointly for bankruptcy when they both have a lot of debt, it certainly is not a requirement. In some instances, it makes sense for only one spouse to file. In these situations, the other spouse can be completely left out of it.
Myth #8: Tax Debt Cannot Ever Be Discharged in Bankruptcy.
While it is true that recent tax debt will stay with you after a bankruptcy is over, you are not stuck with tax debt forever. If you owe back taxes that are more than three years old, it is possible that these tax debts can be discharged. However, certain requirements need to be met for this to happen, so it is important to work with a bankruptcy attorney if you are dealing with past due tax debt.
Myth #9: Filing for Bankruptcy Will Affect My Credit for 10 Years.
False! Just because a bankruptcy remains on your credit report for 10 years, does not mean it will have a negative impact on your credit standing for 10 years. In my experience, the negative impact diminishes after a year or two. There’s a big difference and this is a common misconception.
Myth #10: I Do Not Need an Attorney to File Bankruptcy.
A bankruptcy case is handled mostly by the court-appointed bankruptcy trustee, and while it is possible to file bankruptcy pro se (or on your own without legal counsel), it is definitely not recommended. If anything is filled out incorrectly, or if information is inadvertently left out, this mistake could result in your case being thrown out. Also, if keeping your property is important to you, it is equally as important that you understand what bankruptcy exemptions you qualify for after the case is filed. Making a small mistake can cost you the property you want to keep. In the long run, it is better to hire an attorney to handle the case instead of going it alone. Many attorneys offer affordable payment plans and free consultations.
Filing for bankruptcy is no longer a stigma. The age-old stigma of yesteryear that bankruptcy was a bad thing and only for the financial irresponsible is no longer. If you have questions on this topic or are struggling with debt, call our law firm to schedule a free consultation. Having debt makes you stay up at night. It stresses you out. It ruins relationships. I went through it. Boldly, I mustered up the courage to call a bankruptcy attorney and I pressed the restart button in 2008. And even though eleven years has passed since I made that decision to restart my life, I never forgot what it did for me and how it helped me start over.
It even inspired me and my law firm to become the largest filers of bankruptcies in the country and in the top two in Florida- all from our offices in Orlando and Kissimmee. The Benenati Law Firm has eliminated nearly a billion dollars of debt for its bankruptcy clients, making the firm one of the top twenty filers of bankruptcy in the nation.
Remember, we are local in your hometown. We make our hours convenient for our clients and offer free consultations on Saturdays (9:00 a.m. – 3:00 p.m.) along with our normal business hours throughout the week. Go to https://www.407bankrupt.com/ or call 407-777-7777 to set up a free private consultation and learn more information. Because Life Has a Restart Button.