BANKRUPTCY MYTHS:
Bankruptcy is an indication of financial irresponsibility.
Bankruptcy is such a common occurrance today, that most folks realize that filing does is not an indication of financial irresponsibility.
Most people realize that bankruptcy filings are usually a result of things occuring that are totally unexpected and beyond your control, such as:
* Unforeseen illness - which often times lead to job loss.
* Unanticipated medical bills - either your medical bills or medical bills of family members for whom you are responsible.
* Job loss - where someone suddenly gets laid off after working there for a number of years.
In today's economy, people also understand that filing for bankruptcy is, often times, the most financially responsible thing a person can do in working towards getting a "fresh start" and rebuilding their family's finances.
Bankruptcy absolutely destroys your credit.
A lot of people believe that once you file for bankruptcy, it either severely drops your credit score or even brings it down to zero!
This in
completely
untrue!
While it is true that filing for bankruptcy does drop your credit score somewhat (everyone is different), most clients find that filing for bankruptcy enables them to rebuild their credit quicker than if they never filed at all!
Most clients are facing debt that, based on their current income, they can either never repay entirely or will take many, many years to pay off. Meanwhile, they are making minimum payments, occasionally missing payments, getting hit with late fees and penalties and paying extremely high interest rates. During this time, their credit score is being held down and they are basically getting nowhere. So by not filing for bankruptcy, they are continually at the mercy of the credit card companies and getting farther and farther behind.
On the other hand, when these same clients decide to file for bankruptcy, they have the power to now finally wipe out (i.e. "discharge") the debts that have been holding them down, and begin to rebuild their credit (often times in as little as 3-6 months)!
So filing for bankruptcy enabled these clients to rebuild their credit much faster than if they had never filed!
Also,
Cash Law, P.A. has developed a
"Credit Score Program" for our bankruptcy clients.
We developed this program because we saw that this was one of the biggest mistakes bankruptcy filers were making (not just our clients, but all bankruptcy filers). Folks were filing for bankruptcy and getting their debts discharged (which is great), but then they were not taking steps to actively rebuild their credit scores.
And you must always remember ... your credit score is like
money in the bank!
You're having a credit score over 700 will
save you hundreds of dollars every year!
Cash Law, P.A.'s Credit Score Program is designed to help you rebuild your credit score, to over 700, in as little as 6-12 months.
Our Credit Score Program comes in a folder and has 6 simple steps. You take it home and do it at your own pace. In fact, even if you only do half of it, it still helps!
While it is somewhat unusual, we've had clients who have gotten their credit scores up over a 700 in as little as 3 months!
You can never get credit again after filing for bankruptcy.
This is completely untrue!
Chapter 7 clients usually get their bankruptcy discharge (i.e. when all the debts are wiped out) in about only 3 months, after which clients can immediately begin to get credit and rebuild their credit scores! In fact, you'll be getting solicited by credit card companies even before you receive your discharge! The reason credit card companies actively solicit bankruptcy clients is that they know that after a person files for Chapter 7 bankruptcy, they cannot file another Chapter 7 for 8 years (so a person can't simply file a Chapter 7, then run up a lot of bills and then turn around and file another Chapter 7).
Chapter 13 clients can also get credit. Since Chapter 13's are a repayment type of bankruptcy, where clients repay their debts (to a certain extent) over the next 36-60 months, the Court usually frowns on Chapter 13 debtors incurring new debt. However, the Court will allow you to incur new credit for things that are considered a "necessity" (such as replacing a vehicle that has broken down or replacing an air conditioning unit). On the other hand, the Court may not allow you to incur new credit for luxury items (such as a $4,000.00 hot tub), since such items are not absolutely necessary.
Once Chapter 13 client's cases are over (in 36-60 months), these clients can immediately go out and obtain credit and begin rebuilding their credit scores.
Also, at
Cash Law, P.A., our clients can take advantage of the
"Credit Score Program" which we developed for our bankruptcy clients.
We developed this program because we saw that this was one of the biggest mistakes bankruptcy filers were making (not just our clients, but all bankruptcy filers). Folks were filing for bankruptcy and getting their debts discharged (which is great), but then they were not taking steps to actively rebuild their credit scores.
And you must always remember ...
your credit score is like money in the bank!
You're having a credit score over 700 will save you hundreds of dollars every year!
Cash Law, P.A.'s Credit Score Program is designed to help you rebuild your credit score, to over 700, in as little as 6-12 months.
Our Credit Score Program comes in a folder and has 6 simple steps. You take it home and do it at your own pace. In fact, even if you only do half of it, it still helps!
While it is somewhat unusual, we've had clients who have gotten their credit scores up over a 700 in as little as 3 months!
You can never buy a house after filing for bankruptcy.
This is yet another bankruptcy myth that is completely untrue.
Most bankruptcy clients can qualify to buy a home within 12-24 months after their bankruptcy case is finalized.
Often times, filing for
bankruptcy enables clients to quailfy for a home loan quicker than if they never filed at all!
This is because
bankruptcy enabled the clients to wipe out (i.e. "discharge") the debts that had forever been holding their credit scores down.
If they had never filed, they would have been continuing to make minimum payments, occasionally missing payments, getting hit with penalties and higher interest rates and would never really get the debts paid off!
Meanwhile, because they never filed for bankruptcy, their credit scores were continuing to be low and they were continuing to not quailfy for any home loans.
So, often times, filing for bankruptcy can be the quickest way to get out from under the debts that are holding you down and enable you to finally qualify to purchase a home!
You have to give up all your property when you file for bankruptcy.
Many folks believe that you lose all of your property if you file for bankruptcy.
Quite simply, this is not true!
The only type of bankruptcy where there is a chance that the bankruptcy Trustee could look to sell some of your property is in Chapter 7 (vs. Chapter 13) bankruptcies.
HOWEVER, the vast, vast majority (well over 95%) of Chapter 7 clients can file for bankruptcy and keep all of their property.
The way we are able to protect your property is with bankruptcy "exemptions". The bankruptcy laws created these exemptions so that folks who file bankruptcy can claim their property as "exempt" (or protected) and therefore it cannot be sold off to repay creditors.
It is through our use of the available bankruptcy exemptions that the vast majority of clients can file bankruptcy and keep all their property.
While the list of available exemptions is large, some examples of available exemptions include:
* Homestead exemption - covering any equity you have in your home - covered 100%
* Vehicle exemption - covering any equity you have in vehicles
* Household goods exemption -
* Retirement account exemption (IRA, 401K, pensions, etc.) - covered 100%
* Life insurance exemption - covered 100%
You cannot keep your home if you file for bankruptcy.
Another bankruptcy myth is that you lose your home if you file.
This is also completely
not true.
Florida has a VERY generous "homestead exemption" which allows most clients to file for bankruptcy without worrying about a bankruptcy Trustee looking to sell their home.
The only type of bankruptcy where there is a chance that the bankruptcy Trustee could possibly look into selling some of your property is in Chapter 7 cases (vs. Chapter 13's).
In Chapter 7's, if you have any equity in property that we cannot cover with the available bankruptcy exemptions, then the Trustee to either look to sell the property or "strike a deal" with us wherein you are allowed to keep the property, in exchage for your paying the Trustee an agreed upon amount of money (over the next 3-12 months) with equals the "excess equity you have in your property.
HOWEVER, since Florida has an
UNLIMITED homestead exemption, it is generally no problem if you have a lot of excess equity in it and there is no chance of losing the property if you were to file either a Chapter 7 or Chapter 13 bankruptcy.
BOTH spouses need to file if you are married.
This is not true.
Even if you are married, you can file an
individual bankruptcy case on your own.
However, keep in mind that if you and your spouse are
joint debtors on any debts, while your personal responsibility for the debt may be wiped out in your bankruptcy, your spouse would continue to be responsible because he/she never filed for bankruptcy.
On the other hand, if the debts that are burdening your family are yours alone, it may be a good idea for only you to file. Then, your spouse would not have a bankruptcy filing on their record.
Bankruptcy cannot help me with taxes I owe.
Also untrue.
In fact, many, many clients file bankruptcy specifically to handle back taxes that they owe!
This is because bankruptcy can enable you to wipe out (i.e. "discharge")
older taxes that you owe. It is often times possible to discharge taxes, that are at least 3 years old, when filing either a Chapter 7 or Chapter 13 bankruptcy.
Additionally, if the IRS is demanding a huge amount per month as repayment for back taxes, you can file a Chapter 13 bankruptcy (the "repayment" type of bankruptcy) and repay the newer taxes (taxes less than 3 years old) due over the next 36-60 months which, often times, is much more affordable!
