Common Bankruptcy Mistakes

Deciding whether to file bankruptcy is hard, but with inaccurate information, it is impossible! If you face financial difficulties, you should know the realities of bankruptcy so you can make the best decision.

There are many myths about bankruptcy people commonly believe in. At the Sexner Law Group we  try to tell you the truth about bankruptcy and how it can help your situation.

 

FALSE:  If I don’t have a job, I can’t file for bankruptcy

TRUTH: To file for a Chapter 7 Bankruptcy , you don’t have to have any income at all.  On the contrary, it is even easier if you have less income.

To file a Chapter 13, on the other hand you do have to have some type of income because this is what you will be expected to use to pay your monthly payment plan (see “Types of Bankruptcy”).  However, it does not have to come from a job. It could be from pension income, social security, or rental income.

 

FALSE:  If I have a job, I cannot file for bankruptcy

TRUTH: Actually, most people have a job when they file for bankruptcy. Your employment is just one factor among many that determines if you qualify for a bankruptcy. Whether or not you qualify for a bankruptcy can only be determined case-by-case by an expert in the law. The Sexner Law Group offers free consultations to help you  figure out if you qualify.

 

FALSE:  If I file for bankruptcy, my credit will be ruined.

TRUTH: While it is true that your credit score  MAY go down as a result of filing for bankruptcy (though it may be unaffected or even go up), the truth is that it is not uncommon for people to  get offers for credit cards even just as soon as they have finished filing their bankruptcy.  There are, as a matter of fact, companies that go specifically looking for people who have just completed a bankruptcy to offer lines of credit to them, because there are limits on how soon a person can file bankruptcy again afterward.  For the same reasons, certain auto lenders work exclusively with people who have just gotten a discharge of their debts through bankruptcy.  Many clients of ours have gotten new credit EVEN while their bankruptcy was in progress!

In some cases, a bankruptcy can even IMPROVE your credit score. The reason for this is that one major factor which determines your credit score is called the “income-to-debt ratio . The “income-to-debt ratio” weighs how much you owe to your creditors against how much you earn per year. Since you are probably more in debt than you are making money, and a Chapter 7 Bankruptcy can discharge your debt, at the end of  the process you will have a far better “income to debt ratio” than when you started. Therefore, your credit can actually be better after the bankruptcy than it was beforehand.

 

FALSE:  My house and my car are going to be taken away

TRUTH: Our purpose, from our standpoint as your lawyers, is to protect as much of what you own as possible. Your creditors will try to take your possessions  to pay what they are owed as part of  collections proceedings. We will try to stop them. Our knowledge and experience in the complex laws of protection help us to serve you.  After thousands of cases  that we have we have never had a client lose any possession that we had not  already planned to surrender  anyway.

If you do have a lot of valuable equity in real estate or possessions that are worth a lot of money, and you want these to be protected, then you have the option of filling Chapter 13 instead of Chapter 7 Bankruptcy(see “Types of Bankruptcy”).  This way your assets cannot be taken away by any of your creditors.  Contact us now so we can help you decide which type of bankruptcy is best for you.

 

FALSE: A bankruptcy cannot stop a judgment that has been filed against me

TRUTH: Just because a court has issued a judgment against you on behalf of one of your creditors, does not mean cannot continue with filing a bankruptcy. In fact, if a court has rendered a judgment that you owe money, this is even more of a reason why you should start filing for bankruptcy immediately. Once the court has administered a judgment, the creditor can take drastic actions to collect their money such as freezing your bank account, putting a lien on your property, or garnishing your wages.  Bankruptcy can stop all of these, but you have to act quickly. Contact the Sexner Law Group  today for a free consultation .

 

FALSE:  Bankruptcy cannot help me get rid of taxes I owe.

TRUTH: Income tax debt may be dischargeable under Chapter 7 if it is over three years old and  was filed on time .  We can help you figure out whether your tax debt can be discharged under Chapter 7 Bankruptcy.  Also, even if you cannot get ride of text debt, you can force the government to accept a restructured payment plan for old tax debt under a Chapter 13 Bankruptcy. The rules of discharging tax debt in bankruptcy  proceedings are complicated and necessitate experienced lawyers like the Sexner Law Group. Contact us now to find out how we can help .