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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.

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Law Office of Joseph M Annutto, PLLC

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Nashua, NH 03060

 

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