Myths about Bankruptcy - John R. Hooge, Attorney at Law, PA

1.? I will lose my house and car if I file bankruptcy:? People don?t lose these because they file bankruptcy.? If they do, its because they choose to not pay for them.? Bankruptcy gets rid of debts but normally it won?t get rid of mortgages and liens on cars.? You do have to pay for them to keep them.? And a chapter 13 can keep them from being lost.

2.? Someone will come to my house and go through my possessions:? In 35 years of handling bankruptcies, I have never had that happen to any of my clients.

3.? Filing bankruptcy is easy.? All I need to do is go to the court and file a couple of papers.? Wrong!? Its about as easy as fixing an automatic transmission.? And if you don?t know what you?re doing, chances are you will cause real problems and cost yourself a lot of money.

4.? If I file bankruptcy, I will never be able to finance a car again:? Wrong again.? Most people who file are offered car loans as soon as the case is concluded.? The longer you wait, though, the better the interest rate you will get.

5.? To file bankruptcy, I must be delinquent on all my debts: Incorrect.

6.? If I file bankruptcy, I have to go to court and the judge and creditors will grill me about my debts and my ability to pay: No, almost no one who files bankruptcy even meets the judge.? You go with your attorney to the 341 meeting in an office building, not the courthouse, and meet with the trustee.? Although creditors can show up, they almost never do.? And creditors are very limited on what they ask.

7.? Everyone will know I filed bankruptcy: If you have a Lawrence address and probably a Douglas County address, it will be in the Lawrence newspaper.? Some newspapers publish the names who file and some don?t.? But, that doesn?t mean everyone will know.

8.? If I file bankruptcy, all my debts listed on my credit report are erased.? No, filing bankruptcy does not cause debts to be erased from your credit report, but your report does then state that the debts are?? discharged in bankruptcy and 0 is now owed.

9.? If I file bky, I have given up on my dreams and my chance of ever becoming a success:?? No. What do former U.S. President Ulysses S. Grant, Burt Reynolds, Sam Walton, Walt Disney, Larry King, Kim Bassinger, and Rush Limbaugh all have in common? You guessed it; they all have filed for bankruptcy

10.? I will lose my job if I file bankruptcy: In 35 years I have only had 1 client who said she thought she lost her job because she filed bankruptcy.

11.? If I file bankruptcy, I?ll never get another credit card again: Wrong.? Just as with car loans, you will get offers usually as soon as the case is over.? But, the longer you wait, the better the credit you will be offered.

12.? Under the new law, there is no more bankruptcy:? Sounds like some debt collector trying to intimidate someone into paying money.? This is not true

13.? Under the new law, the trustee can take my assets: Most of my clients don?t lose anything.? You get to keep all exempt assets and proper planning usually prevents losing anything.

14.? If I?m married, my spouse must file bankruptcy with me: Not true, although the cost is usually the same for both.

15.? If my spouse doesn?t file with me, my creditors can go after he/she: Creditors can only go after your spouse if he/she agreed to owe a debt, or if it?s a medical bill or rent.

16.? Filing bankruptcy often leads to divorce: Just the opposite is true.? Filing bankruptcy and alleviating debt problems usually helps a marriage.? Financial problems are the main cause of divorce.

17.? You can?t get rid of back taxes in bankruptcy: Income taxes over 3 years old are discharged in bankruptcy, but certain rules must be met.? If you owe any type of taxes, you must get a lawyer experienced in bankruptcy and taxation issues.

18.? Creditors can still harrass you after you file bankruptcy: No, they are ?stayed?, i.e., prevented from contacting you to collect a debt.? If they persist, your attorney can take the creditor to court.

19.? You can only file bankruptcy once: You must now wait 8 years after filing a chapter 7 bankruptcy to file another 7.? But, the waiting period is shorter if the prior bankruptcy or the new one is a chapter 13 wageearner plan.

20.? I?m not allowed to repay creditors even if I want to.? Once your case is concluded, you can pay anyone you wish to pay.

21.? I can file a medical bankruptcy: Although medical bills are the primary reason people file bankruptcy, you must list all debts you owe.

22.? Bankruptcy will hurt my credit for 10 years: Although bankruptcy will be on your credit report for 10 years, how you pay debts and what debts you incur after you file bankruptcy will have the most effect on your credit in the future.? Many people who file bankruptcy, if they are careful afterwards, find that their credit will improve.? But, they need to find out what works and what hurts.? This is why my clients get to see Judy Lewis, our credit counselor and budget coach.

Source: http://www.johnhoogelawoffice.com/wp/2012/07/myths-about-bankruptcy/

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