Bankruptcy Information
BANKRUPTCY: The Myths
by: Frank M. Spoto, Jr., Esq.With all of this talk about the current “financial crisis,” one cannot help but ask what can be done to stay afloat. Maybe you have had a serious reduction in pay due to less hours or worse. Maybe you have been faced with medical problems that need to be dealt with, but your debt keeps you from taking the time from work so that you can take care of yourself. Whatever your situation may be, bankruptcy may have crossed your mind at one point, but you have always been afraid to approach an attorney because of the things that you have heard.
Bankruptcy has developed a bad reputation over the years, especially in the last few. Myths pour out like running water on this subject, usually from others that know just a bit about it or companies trying to get you to buy into some other debt management plan. Today, we will take a look at some of these myths and set the record straight.
Myth 1: They changed the laws, so now I can’t file bankruptcy. Not true. I had to put this one first because I hear it all the time. Many debt settlement companies and even some attorneys began advertising this myth for various reasons. The bottom line . . . bankruptcy is available. Remember, bankruptcy comes in different forms. The question usually isn’t if you can do it, it’s how you should do it.
Myth 2: It is better to work it out with my mortgage company than file bankruptcy. I can’t tell you how many people I have talked to that were convinced to continue talking with their mortgage company only to lose their homes in the end. While some lenders will work with their customers, it isn’t wise to gamble on your lender being a “good” one, especially with so many sales of mortgages between lenders. A bankruptcy will stop a foreclosure and force your lender to the table.
Myth 3: A bankruptcy will wipe out my mortgage. This is quite the opposite of the last myth. Generally, a lien will run with your property even through bankruptcy. This means that you will still need to pay on that mortgage.
Myth 4: I will lose everything that I have. Not true. In bankruptcy, you are afforded protection for certain amounts of property. Most people simple don’t have enough equity in their personal property or real estate to worry about losing it. Even those that do have the equity can work out plans through the court to keep their property.
Myth 5: Bankruptcy will destroy my credit.
Not necessarily true. Most people that are in need of bankruptcy already have poor credit. It is true that a bankruptcy will appear on your credit report longer than bad debts, but many
creditors look to your debt to income ratio when extending credit. There are even several creditors that target bankrupt individuals extending them credit, though I would seriously
consider not going with those companies. Bankruptcy can give you a “fresh start.”
Myth 6: I should/can max out my credit cards before filing. NOOOO! That is called fraud boys and girls. I know that it seems obvious to most of you, but I had to include it since I hear this over and over again.
Myth 7: If I file for bankruptcy, then I am a failure. Certainly not. Most people that file for bankruptcy do so because of some life-altering event. People that suffer from medical problems, divorce, loss of income, etc. can quickly see their debts become overwhelming.
With all these myths (and many more) out there, I can understand why people are afraid to discuss bankruptcy. Give our offices a call. Bankruptcy can really help those that need it. We can tell you if it is right for you. Our consultations are FREE and can be done by phone.
The path to a brighter future is out there. It is up to you to take that first step to financial freedom. Take Back Your Life! Call us today!!!
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File Chapter 7 - a clean slate, a fresh start
In a Chapter 7 Bankruptcy, sometimes referred to as liquidation, most individuals can file for relief from their debts without losing their property.
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Debt Reorganization / Debt Relief
In a Chapter 13 Bankruptcy, as in a Chapter 7, most individuals can file for relief from their debts without losing their property. There are three main reasons why our clients need a Chapter 13 Bankruptcy.
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