For those looking for solutions to their debt problems, there’s a lot of misleading information out there pertaining to bankruptcy. At FerrisWinder, PLLC, we often hear from people who were initially turned off to the prospect of filing for bankruptcy because of the horror stories they heard.
The truth is, bankruptcy is not a punishment levied against people who have fallen on tough times. Rather, it’s a tool that can help people start over. Below are some common misconceptions or myths pertaining to bankruptcy followed by brief explanations intended to offer general insight into the truth about the benefits bankruptcy has to offer. For in-depth explanations, we encourage you to contact us and speak with an attorney.
- My credit will never recover: Think of it this way, if you’re overwhelmed with debt, chances are that your credit is in rough shape. By filing for bankruptcy, you get to start over while rebuilding your credit. Many of our clients are able to obtain credit and auto loans while their bankruptcy is in progress or very shortly after their bankruptcy is finalized. Within about a year after discharge is complete, clients are able to purchase a home.
- I’m going to lose everything: Quite the opposite. In many cases, those who file for bankruptcy lose nothing. Many people assume that liquidation during Chapter 7 means they will lose their car, their family heirlooms and other possessions. The fact is that there are numerous state and federal exemptions that allow debtors to keep their most important possessions. In short, you get to keep what’s yours.
- The bank is going to take my house: Foreclosure is a frightening prospect for a homeowner. But bankruptcy can help you keep your most valuable asset. By filing for Chapter 13 bankruptcy, the automatic stay will suspend foreclosure. You can then gradually make payments, look at options for making your payments more manageable, get current, and remain under your own roof.
- Everyone will find out that I filed for bankruptcy: In the past, people were concerned about their bankruptcy filing being published in the local papers. Few, if any publications still do so. Furthermore, much of the stigma surrounding bankruptcy has eroded as high-profile people file for bankruptcy. Furthermore, we will be discreet and do everything within our power to keep your bankruptcy filing quiet.
- The creditors will come after me if I file for bankruptcy: If you’re considering filing for bankruptcy, chances are that you’re already being hounded by bill collectors and creditors. Once you file your bankruptcy petition, an automatic stay goes into place and your creditors are legally barred from contacting you.
- My debts can’t be discharged: It’s true that certain types of debts cannot be discharged through bankruptcy, including student loans, certain types of tax debts, child support payments and alimony (spousal support). Although these types of debts won’t just go away, bankruptcy can give you the breathing room you need to pay these debts down gradually over time.
If your concern is not addressed above or you want to learn more about how bankruptcy may be an option for you, reach out to us at FerrisWinder, PLLC, and schedule a free initial consultation. Our lawyers have more than 35 years of combined experience handling a variety of bankruptcy issues.