MYTHS ABOUT BANKRUPTCY
Even If I file for bankruptcy, Creditors will still harass me and my family.
This is absolutely false. As soon as you file for bankruptcy a hold is put on all your outstanding debts and any attempts to collect any debts. The bankruptcy law prohibits a creditor to attempt to collect, possess, or even contact the debtor in regard to any debt. If a creditor does not follow the rules, the debtor may have an action in the form of punitive damages, which are meant to punish a creditor for not following the procedures set out in the bankruptcy code. Once you file for bankruptcy, creditors must leave you alone or suffer the consequences.
If I file for bankruptcy I will never get credit again.
This is simply false. If this were true then nobody would file for bankruptcy. Americans depend on credit and this is no different than a debtor who has filed for bankruptcy. The truth is you are probably a better candidate for credit the first day out of bankruptcy then before you filed for it. Creditors will not want to give you credit if you are close to bankruptcy. However, after bankruptcy you will have no debt and Creditor know you will not file again for several years. Creditors also look more to a debtors stability, as opposed to the fact you filed for bankruptcy. So once you have timely paid a few bills (i.e. like a secured credit card) your credit score will rise quickly.
Everyone will know I've filed for bankruptcy.
Unless you're a prominent person or a major corporation and the filing is picked up by the media, the chances are very good that the only people who will know about a filing are your creditors. While it's true that bankruptcy is a public legal proceeding, the numbers of people filing are so massive, very few publications have the space, the manpower or the inclination to run all of them.
I'll lose everything I have.
This is the misconception that keeps people who really should file for bankruptcy from doing it. For most people, they'll keep everything they own. Well over 95% of bankruptcy cases filed by individuals are "no asset" cases in which the debtor keeps everything he owns. This is because the law provides for exemptions in the most common types of property. For example in Massachusetts, you can exempt up to $500,000 in equity in your home. There are also exemptions to cover your car, your personal possessions and your retirement funds.
If you're married, both spouses have to file for bankruptcy.
Not necessarily. It's not uncommon for one spouse to have a significant amount of debt in their name only. However, if spouses have debts they want to discharge that they're both liable for, they should file together. Otherwise, the creditor will simply demand payment for the entire amount from the spouse who didn't file. It is also less expensive for spouse to file together then separately.
Bankruptcy represents personal or moral failure.
More than 90% of bankruptcy filings are traceable to job loss; illness; or divorce, factors largely out of anyone's control. Bankruptcy is a safety value to prevent individuals from being buried by debts they can never repay.
Bankruptcy relief is no longer available.
This is not true. The vast majority of debtors will still qualify to file bankruptcy under Chapter 7 of the Code. For those who make too much money (but most don’t) they can still be granted relief through a Chapter 13 filing.
Medical bills can't be discharged in bankruptcy.
A variation on this myth is that "you can't discharge credit card debt in bankruptcy." This has the sound of the law-as-described-by-bill-collectors. Almost all unsecured contract debt, like credit cards, personal loans, and medical bills, remain dischargeable in bankruptcy.
There is a minimum amount of debt required to file bankruptcy.
Bankruptcy law does not set any minimum amount of debt necessary to file. If the debt appears to be beyond your ability to pay, you can elect to file bankruptcy if it represents a smart choice in your personal and financial situation.
Law Office of Joseph M Annutto, PLLC
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