Bankruptcy Myths

Myth One: Bankruptcy relief is no longer accessible.

Virtually all of the relief formerly available through bankruptcy survives in today's bankruptcy code. It is a little more involved as well as somewhat more costly, however it still works.

Myth Two: You can't file bankruptcy if you have a career or job.

The new "means test" is supposed to divert some filers that make more than the median income for their state or geographical location to Chapter 13. The only manner to file a Chapter 13  is to HAVE a job. So, this is utterly untrue.

Myth Three: When filing bankruptcy, you can’t discharge medical debt.

Another form of this myth is that people believe is that you can’t discharge credit card debt in bankruptcy either.  This myth was probably started by bill collectors as they wished to interpret the laws of bankruptcy.  However, almost all unprotected contract debt, like credit cards, personalized loans, and medical bills, remain dis-chargeable in bankruptcy.

Myth Four: Chapter 13 plans demand settlement in full of debt.

When a bankruptcy plan is negotiated, how much you have to pay creditors is determined by your circumstances.  Some require that you pay nothing back all the way up to 100% back---and every variation in between.  Just how much you must pay when filing 13 is determined by your disposable earnings, the value of your non- exempt assets, and the total amount of debts you have.

Myth Five: Individuals who file bankruptcy won't be able to obtain credit for 10 years.

Not true!  Individuals in the midst of Chapter 13 can easily borrow cash throughout the situation; individuals who've filed Chapter 7 are often flooded with credit card offers after they obtain their . Even though the credit rate is not the greatest, credit IS offered.  This myth most likely obtained its start in the fact that the Fair Credit Reporting Act allows the reporting of a bankruptcy filing for 10 years.

Myth Six: You will lose all your possessions when filing for bankruptcy.

Well over 95 % of bankruptcy situations filed by individuals are "no asset" cases in which the debtor keeps everything he owns. That's because exemptions supply for assets that the debtor can easily keep as well as some assets, like pensions, are beyond the reach of bankruptcy trustees and lenders.

Myth Seven: Bankruptcy represents personal or moral failure.

More than 90 % of bankruptcy filings are traceable to job loss; disease; or divorce, elements largely out of anybody's control. Bankruptcy is a safe way to eliminate individuals from being buried by debts they can never repay.

Myth Eight: Bankruptcy costs our world also much.

Credit card issuers are wildly financially rewarding regardless of the small percentage of loans discharged in bankruptcy. Our economy has actually benefited by the buying power promoted by credit as well as the pricing of credit takes into account that not everybody will certainly be able to repay.

Myth Nine: You must have a certain amount of debt to file.

There is no set amount of debt you must have to file for bankruptcy.  The laws do not require this.  Instead it is based on whether the debt appears to be beyond your ability to pay.  If so, you can easily elect to file bankruptcy if it represents a smart choice in the personalized as well as financial condition.

Myth Ten: If you are married, you and your spouse must both file.

Spouses can file together but do not have to.  They may file separately.   Filers need to pay careful attention to what property will be treated as property of the bankruptcy estate if only one is filing for bankruptcy.

If you decide to file for bankruptcy, you need a lawyer to guide you.  Give Michael Noble a call.  As a Sacramento Bankruptcy Attorney, he can insure you know your options and that you make the right decisions for your situation.  916-473-7855.