Bankruptcy Myths!!!

BANKRUPTCY MYTHS

When facing an overwhelming amount of debt that you just don’t know how to handle, it is vital for you to fully understand your legal rights and options. Bowen Amaker, Attorneys at Law, is happy to answer your questions by offering a free initial consultation..  We have compiled a list of common Bankruptcy Myths that many people believe are true, which we can assure you are not what you can expect to occur in your bankruptcy. 

• Everyone will know I have filed for bankruptcy.

Unless you are a very important person or a major corporation, chances are that the only people that will know about your bankruptcy are your creditors.  Although filing bankruptcy  is of public record, the number of people filing everyday are so massive, publications are unlikely to run it. 

• All debts are wiped out in a Chapter 7 Bankruptcy .

Unfortunately not.  There are certain types of debts that can’t be eliminated.  For example, child support and alimony, student loans, and debts incurred as a result of fraud.  If you defrauded someone and a judgment has been made against you, that won’t erase either.

• I will lose everything.

This is definitely not true.  Generally, debtors are able to keep most of their belongings – especially their home and car (as long as there is very little equity in each).  It is not true that the government will sell everything you have and you will have to start over in a cardboard box.  Every state has exemptions which protect certain types of assets (i.e., your house, car, retirement plans, household goods, clothing).  If you are worried that you will lose everything in bankruptcy, contact our office to learn more. 

• I will never get credit again.

False.  After receiving a discharge from bankruptcy, you will begin receiving credit card offers.  However, be aware that they will be for high interest rate credit cards.  I advise you not to run up your credit cards again because it will be another eight years before you can  file another Chapter 7 bankruptcy petition again. 

• If you’re married, both spouses have to file for bankruptcy.

Not True.  Although it may be a better option to file a joint petition, it is not required of married couples.  There are various reasons why married couples may not file jointly – i.e., the debt one spouse incurred took place prior to being married. 

• It is really hard to file for bankruptcy.

Although it may be hard to file for bankruptcy due to the vast amount of paperwork involved, it is not difficult to qualify for bankruptcy. 

• Only deadbeats file for bankruptcy.

Although there use to be a stigma associated to filing for bankruptcy, in today’s society, the same does not hold.  The economy after the real estate bust has placed a lot of individuals in the unemployment line through no fault of their own.  Imagine the individual that had substantially good credit and paid his bills on time while employed.  But due to the economic downturn, he has lost his job and is unable to meet his monthly payments.  It then becomes a snowball effect where the debtor is now missing other credit card payments, mortgage payments, utility payments, etc…  This is what our society has become – no deadbeats – only unfortunate households. 

• You can’t get rid of back taxes.

Generally speaking, this is true.  However, if you have taxes that are over 3 years old and you had filed all your tax returns, it may be eligible for discharge.  However, speak to an attorney to learn more about discharging tax debt. 

• I can max out all my credit cards.

Unfortunately, the bankruptcy courts disfavor this type of activity.  Should they be aware of this type of activity (and they usually are), they may either dismiss your case entirely or require you to be responsible for this amount of debt incurred in your recent transactions. 

Consult a Bankruptcy Attorney.   Contact us today for your free consultation.