There is no doubt that declaring bankruptcy is an emotionally difficult step. As a bankruptcy attorney, I have witnessed numerous times how good, hard-working people can fall on hard times and be swamped by unmanageable debts.
Sometimes, filing for bankruptcy is the only option of getting back on your feet. Unfortunately, far too many people who would benefit from declaring bankruptcy hesitate to do so because of misconceptions, half-truths, and outright lies that they have been exposed to.
Therefore, getting your facts straight is crucial when faced with the prospect of bankruptcy. How else can you make an informed decision based on facts and not on rumor? That’s why when I meet with clients, I always try to answer all their questions, debunk any myths they may have heard, and reassure them that bankruptcy is just a bump in the road – not the end of it.
Let the truth be known
If you have heard some dubious information about the effects of bankruptcy on your future finances and life in general, now is the time for reality check.
Here are some examples of common bankruptcy myths:
Myth 1: Only deadbeats file for bankruptcy
Not true! The economy has been brutal to millions of hard-working people who get into overwhelming debt for reasons beyond their control. A job loss, a divorce, or mounting medical bills can plunge many families into debt. (As a matter of fact, medical bills are the cause of more than 60 percent of all bankruptcy filings in the United States). That’s why Congress created bankruptcy laws – to bring debt relief to these good people.
Myth 2: I will lose all my property in a bankruptcy case
Not necessarily. Many states (including Texas) have a law called “Asset Protection” that allows you to keep certain property no matter how much money you owe. That’s one of the reasons why you should work with an experienced bankruptcy attorney who knows all the laws inside out. In most Chapter 7 bankruptcy cases handled properly, most of your assets can be exempted and protected by the bankruptcy code. For Chapter 13 bankruptcy cases, losing property is even less likely.
Myth 3: I will lose my job if I file bankruptcy
No, you won’t. Federal laws prohibit discrimination by either a private or a government employer because of your bankruptcy. This means you can’t be fired or otherwise denied work for filing bankruptcy.
Myth 4: I will never be able to establish credit after a bankruptcy and my credit score will stay low
Never say never! It’s true that the bankruptcy will remain on your credit history for ten years, but if you are diligent about paying your bills on time, your rating may recover, and your credit score will increase as quickly as two years. In fact, re-establishing your credit might be easier AFTER bankruptcy because a lot of your debts will be discharged and you’ll start with a clean slate – or at least less financial burden.
Myth 5: Taxes cannot be eliminated in bankruptcy
Depending on the specifics of your case, income tax debts may be eligible for discharge. You can wipe out your debts for federal income taxes in Chapter 7 bankruptcy only if five specific conditions are fulfilled. Please contact me if you’d like to know what these conditions for discharge are.
Myth 6: I must be broke to file bankruptcy
This might be a logical assumption, but there is no bankruptcy law that says you have to be penniless in order to file for bankruptcy. Bankruptcy relief is available to anyone who is unable to repay their debt, including credit card debt, any other unsecured debt and even secured debt.
Myth 7: If I file, I will lose my Pension, IRA, or 401(k)
Don’t worry – that is not going to happen. Under the Employee Retirement Income Security Act (ERISA), your retirement accounts are exempt from debt collectors. Once again, the law is on your side through bankruptcy exemptions.
Myth 8: Everyone will know I declared bankruptcy
The chances of it are very slim. Unless you are a famous (or infamous) person, the only people who will likely know about your bankruptcy will be your creditors. Although a bankruptcy filing is information available to the public and will show on your credit report, it is not easily obtainable and requires paid software to access this information from the bankruptcy court.
Get back on your feet.
These are the main misconceptions that people have about bankruptcy. If you have any other concerns not covered above, don’t hesitate to contact me. Here’s what you need to know about the bankruptcy process: it is not shameful and it doesn’t mean that you’ll never be “whole” again.
What relief, other than the entire or partial discharge of your debts, can you expect from filing bankruptcy? You could benefit from lower (more manageable) payments, and put an end to foreclosure proceedings, repossessions, garnishments, as well as harassing phone calls from creditors.
Look at bankruptcy as a fresh start and an opportunity to put your life in order. If you want to know what your rights are when filing in Texas, feel free to contact my law office for a free consultation:
WARREN & MIGLIACCIO, LLP
ATTORNEYS AT LAW
3600 SHIRE BLVD. SUITE 205
RICHARDSON, TEXAS 75082
Phone: (888)-584-9614
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