Top Ten Bankruptcy Myths-Part 2
Myth 6 – I will never be able to get credit again. (I will never be able to purchase a home, a car, ect.) Filing Bankruptcy will hurt my credit for 10 years.
Fact-If you take the proper steps to repair your credit you will be able to purchase a home, a car or other items on credit in the future.
Many individuals are able to purchase a vehicle shortly after filing and a home within 2-4 years of filing. Additionally you will always be able to purchase items outright when you can afford them. As far as credit cards and unsecured debt those will also be available almost immediately albeit with high interest rates and fees, however within a year or so most individuals are able to obtain unsecured credit with reasonable terms. This does not mean you should go out and incur new debt, it just means that there are options available to you if necessary.
Fact-A bankruptcy will stay on your credit report for 7-10 years. However, it will not have a detrimental impact for that long. If you take the proper steps to repair your credit you can have a great credit score within a year of filing a bankruptcy. Additionally creditors consider many factors when determining to offer you credit, such as length of current employment, current income, and how you have managed debt since the time of the bankruptcy.
So even though a bankruptcy hurts your credit it is not the end, it is the beginning of rebuilding your financial security.
Myth 7-Taxes are never dischargeable in bankruptcy
Fact-You can get rid of income tax debt. However, specific rules apply including a requirement regarding the age of the tax debt and the length of time from filing the tax returns. There are very specific requirements that are crucial to dismissing tax debt and a qualified attorney should review your case prior to filing.
In addition to income taxes other taxes may or may not be dischargeable in bankruptcy. Our office practices in tax resolution and can discuss the possibility of discharging any type of taxes in bankruptcy, and whether this is the best option for you.
Myth 8-I can keep some of my debts out of the bankruptcy filing.
Fact-All debts must be listed, you cannot pick and choose what to include. Failure to list debts can result in additional costs and potential even the dismissal of your bankruptcy case without a discharge of any of your debts.
Additionally failure to disclose other items such as assets or financial transaction can also result in your case being dismissed without a discharge or even to prosecution for fraud. It is important to disclose EVERYTHING to your attorney and they can advise you as to what needs to be disclosed.
Myth 9-There is a minimum amount of debt (or a maximum amount of debt) required to file Bankruptcy.
Fact-There is no minimum amount of debt to file a bankruptcy. A bankruptcy can and should be filed if the debt is unmanageable. This number is different for every person and depends on many factors, including current income and future outlook.
Fact-There is no maximum amount of debt that would disqualify you to file bankruptcy, however there are different limitations depending on what chapter of bankruptcy is filed. If bankruptcy is the right option for you an attorney can assist you in determining which chapter to file.
Myth 10-I am a bad person if I file bankruptcy because only deadbeats file bankruptcy.
Fact-Most people who file bankruptcy do so because of a major event that was beyond their control, or a major life change, such as loss of a job or reduction in income, a serious illness or death in the family, a divorce, a failed business or some other catastrophic event. Most individuals who file are honest hard working people who have come upon tough times. Individuals who file for bankruptcy have struggled to pay their bills for months or even years and fall further and further behind. The bankruptcy law was created to offer the average individual a chance for a fresh start and the opportunity to get back on their feet financially.
Again the most import thing is that there are options! You should discuss all of your options with a qualified attorney who can advise you as to how the above items will affect you and whether bankruptcy is the right option for you.
Our attorneys can help you decide if bankruptcy is the right option for you!
Schedule your no obligation consultation with our office today!