DROWNING IN DEBT?
Did you know that
the filing of a bankruptcy petition automatically imposes a stay on your creditors barring them from taking any collection
actions against you? This means that it stops all collection efforts, repossessions, garnishments, and foreclosures
- from the moment the case is filed with the Court.
Bankruptcy Myths:
1. Bankruptcy is not allowed anymore.
This is completely untrue. Bankruptcy remains a perfectly legal often viable option for many
people in financial trouble who need a fresh financial start. In 2005, bankruptcy laws were changed in an effort to
weed out those individuals who did not truly need bankruptcy protection. Since the new laws are complicated and require
a complete understanding prior to filing a case, it is highly recommended that you hire an experienced bankruptcy attorney
to make sure that you qualify and that it is done right. Also, seeing a bankruptcy attorney will you the opportunity
to explore alternatives if bankruptcy is not right for you.
2. Only
"losers" file for bankruptcy.
You may not know it, but most people who file for bankruptcy do so after a life-changing event, such as a loss of a job, a serious illness, or a divorce. For many, they've struggled
to pay the bills for months and just keep falling further behind. Bankruptcy can be a financial tool that may make sense
for almost anyone at certain times.
3. If you're married, both spouses have to file for bankruptcy.
This again, is a myth. It
is often the case that one spouse has a significant amount of debt in his or her name while the other spouse has sterling
credit. In such a case, it may be possible for only one spouse to file. Remember, that if spouses have
debts they want to discharge that they are both liable for, they would need to file for bankruptcy together. Otherwise,
the creditor will simply demand payment for the entire amount from the spouse who did not file for bankruptcy.
4. You do not have to list all your debts in bankruptcy.
Under the law, you must include all of your debts if you file for bankruptcy. This includes
store cards, gas cards and medical debt. However, this does not stop you from choosing to pay back a particular debt
after your case is concluded - though you would no longer be legally obligated to do so. If you have a credit card that
has a zero balance, this account would not have to be listed in your case. However, it may be a violation to pay off
a large debt prior to filing a bankruptcy in order to avoid having to list your favorite credit card.
5. You cannot discharge taxes in bankruptcy.
While in general, this is
true, certain taxes may be dischargeable. The decision to file a bankruptcy to discharge taxes, is one that requires
the input of an experienced bankruptcy attorney since there are requirements which must be met for your taxes to be dischargeable.
6. You can only file for bankruptcy once.
This
is not true. For example, you can file for Chapter 7 bankruptcy once every eight years. You cannot have more than one bankruptcy case
open at one time. If you have filed before and are considering filing again, you should contact an experienced
bankruptcy attorney to assist you.
7. Might as well max out my cards
since I'm filing for
bankruptcy anyway.
This is not true. Maxing out your cards before filing bankruptcy may lead you to being charged with fraud. Once
you realize that you will not be able to pay back your debts, you should immediately cease using credit. When you file
for bankruptcy, your creditors will review your pattern of usage and all transactions made prior to filing the case.
Maxing out your cards could lead to your case being denied and more importantly, to a criminal charge.
