When MICHAEL O’LEARY, ESQ conduct an office consultation, clients often have many misconceptions about bankruptcy. Their misconceptions are usually brought about by listening to people who do not know what they are talking about. Some of these myths are:
MYTH 1: There is no more bankruptcy, because the new law eliminated it.
Nothing could be further from the truth. You can do virtually everything under the new law that you could under the old law.
MYTH 2: Everyone will know that you filed for bankruptcy.
Unless you are a famous person and the filing is picked up by the media, the only people who usually know of your bankruptcy are you and your creditors. While bankruptcy filings are public records available to anyone, few people access court records to determine who has recently filed.
MYTH 3: You will lose everything you have.
Most people lose nothing in a bankruptcy filing because their assets are exempt. After consultation with an experienced attorney, if it appears that you are going to lose a treasured asset, you do not have to file. In almost all instances, a bankruptcy filing is a voluntary act.
MYTH 4: You will never be able to own anything again.
This is completely false. In the future you can buy, own and possess whatever you can afford.
MYTH 5: You will never get credit again.
You will certainly receive credit offers after bankruptcy, usually at higher interest rates. Because your debt is gone, your “debt to income ratio” will have improved considerably, and lenders always look at this. If you maintain steady employment and stay current on your existing bills, your credit rating will improve with the passage of time.
MYTH 6: If you are married, both spouses have to file.
Not true. If only one spouse is in debt, there is no reason for both to file. However, if there is joint debt involved, and only one spouse files, the non-filing spouse will remain fully liable for the debt.
MYTH 7: It is really hard to file for bankruptcy.
Not true, if you have retained the services of an experienced and capable Bankruptcy Attorney. The decision on whether or not to file may be a difficult one, but the act of filing a bankruptcy is not difficult for an experienced Bankruptcy Attorney.
MYTH 8: Only “deadbeats” file for bankruptcy.
Actually, “deadbeats” rarely file for bankruptcy. They simply work “off the books” somewhere, have unlisted phone numbers and never get ulcers worrying about their shaky finances. The people who file for bankruptcy are good people who are simply getting “beaten up” by real life, such as a divorce, job loss, serious illness, failed business, an unexpected family emergency, or those who fall in debt when they are “young and foolish”, before they know any better.
MYTH 9: You do not have to include all of your assets and all of your debts when you file for bankruptcy.
In bankruptcy, you cannot “pick and choose” which creditors you will list. You have to list all creditors. You also have to list all of your assets. To do otherwise is to commit bankruptcy fraud, which is definitely not a good thing.
MYTH 10: You cannot get rid of back taxes through bankruptcy.
Income taxes that are more than three years old can be discharged in bankruptcy. However, recent income taxes (i.e. less than 3 years old) cannot be discharged, and “trust fund” taxes (withholding, sales tax, etc.) can never be discharged.
MYTH 11: You can only file for Chapter 7 once.
Not true. You can file a Chapter 7 bankruptcy once every eight years, although hopefully you will not have to avail yourself of this right.
MYTH 12: Creditors can still harass you and your family after you file for bankruptcy.
Not true. With very few exceptions, the Automatic Stay created by the act of filing for bankruptcy causes all creditors activity to cease immediately.
MYTH 13: You can max out your credit cards prior to filing for bankruptcy, and not suffer any consequences.
Not true. Bankruptcy is a friend to the honest debtor, but the system does not condone fraudulent behavior.
The above misconceptions, and many others, can and will be cleared up after your Free Bankruptcy Consultation with our office. Let us help you regain your financial stability.