Top 11 Myths About Bankruptcy

1. Congress ended bankruptcy in 2005

In 2005 the government passed the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA). This new act did not remove the old bankruptcy law, but rather added to and altered the procedures of filing for bankruptcy. The process is now more complex and requires more paperwork, but this is the job of your lawyer- to ensure simplicity and effectiveness.

2. Everyone will know you filed for bankruptcy

This is absolutely not true! Since bankruptcy is public information, if someone specifically searches detailed information on you, they will be able to see your file. Other than that, the only individuals who will know whether you file for bankruptcy is you, your attorney, your creditors, and anyone you choose to disclose such information to.

3. If you file for bankruptcy, you will lose Everything you have

This is the furthest from the truth. Most of the time individuals who file for bankruptcy only lose their debts. There are Federal and state laws in place that exempt and protect certain assets, such as property and 401(K) accounts. We can help you figure out exactly what is exempt for your individual case.

4. You will never own anything again

Following your discharge from bankruptcy, you will be able to own anything you wish. Although bankruptcy stays on your record for 7-10 years, the more time passes, the less important bankruptcy is to lenders. The fact is that lenders have to lend in order to profit. You will be considered a high risk borrower at first, but as time goes on, your past will matter less and less. If you lost your home, you should be able to qualify for a normal rate FHA home loan after 2 years of discharge.

5. You will never get a credit card again

Being as an individual may only file for Chapter 7 bankruptcy once every eight years, once you are discharged from bankruptcy, you are an excellent potential borrower. You no longer have any debt and need credit in order to move forward. This makes you a very attractive loan candidate. On top of this, lenders know you will not be able to file again for almost a decade, so their money is in good hands.

6. Filing for bankruptcy kills your credit

Although bankruptcy remains on your credit for 7-10 years, it does not destroy your credit for this long. Typically, by the time most individuals file for bankruptcy, their credit is already very bad. So, the quicker they file, the quicker they will recover. The only way to kill your credit when it comes to filing bankruptcy is if you miss post-bankruptcy payments. Bankruptcy wipes your slate clean. Your credit is typically restored 2-4 years following a discharge.

7. Both spouses have to file

Although it might make sense for a husband and wife to file for bankruptcy jointly if they have a ton of debt, it is not a requirement. Sometimes it is smarter for just one spouse to file in order to keep the other spouse’s credit in good standing. Even if there is joint debt, so long as the non-filing spouse remains current on payments, the non-filing spouse’s credit will not be affected.

8. Only losers file for bankruptcy

This is an absolute lie! Most individuals who file for bankruptcy are hard working and honest people, who ran out of options. Bankruptcy is a last resort for them. 90% of bankruptcies are the result of uncontrollable events, such as illnesses, divorce, job loss, etc. Only 10% of bankruptcies are the result of financial irresponsibility and lack of intelligence.

9. Chapter 11 is for “Businesses Only”

This is simply not true. The Bankruptcy Code 109 sub-paragraph states that individuals as well as corporations may file for Chapter 11 bankruptcy. In the case you decide to file under Chapter 11, make sure your lawyer is experienced with this type of bankruptcy, as it is the most complex section of the Bankruptcy Code.

10. You must owe a Minimum amount of debt to file

If you are struggling to pay your debt, you may qualify for bankruptcy. Every situation is unique and there is no set minimum to file for bankruptcy. We are here to help you decide whether you qualify and which Chapter best suits your needs.

11. It is super hard and expensive to file for bankruptcy

Different offices charge different fees for filing bankruptcy. Because we understand that filing for bankruptcy is the last resort for you, we offer free consultations for all bankruptcy clients. As far as the difficulty of filing for bankruptcy- do not worry! This is your lawyer’s concern. Our goal is to make this transition in your life as painless and simple as possible.

Contact us today for a free consultation.

Fridlin & Associates, P.C.

1517 Voorhies Ave, Suite 4

Brooklyn, NY 11235

(718) 372-4400

top-bankruptcy-myths-bankruptcy law

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Published by

ElaineFridlinEsq.

Fridlin & Associates, P.C. is a financial law firm for individuals and small businesses in metropolitan New York. If you or your business face a problem concerning bankruptcy, debt settlement, loan modification program, the sale and purchase of residential or commercial real estate, landlord/tenant disputes, enforcing your rights as a creditor, the sale and purchase of a business, or employment litigation, Fridlin & Associates stand ready to provide the solution that protects your best interests. We can help you: Eliminate Debt! Stop Foreclosure! File for Bankruptcy! Apply for a Loan Modification Program! Stop Wage Garnishment! Stop Lawsuits! Eliminate Judgments! Eliminate or Reduce the second mortgage on your home! Reduce the mortgage on your investment property to its fair market value! Eliminate your obligation to pay creditors and medical expenses! Eliminate business loans! Release Frozen Bank Accounts! Stop harassing phone calls! Please call 718-372-4400 today for a free consultation. We have appointments available Monday through Friday and your first visit is free. Fridlin & Associates, P.C., also provides legal representation on wage dispute matters under the Fair Labor Standards Act in both federal and state courts. Learn more about Elaine Fridlin and Fridlin & Associates here. If you’re interested in bankruptcy as a potential solution to your debt management problems, you can learn more about bankruptcy for both consumers and businesses here.

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