As an Asheville bankruptcy attorney, I hear a lot of misguided ideas potential clients have heard from friends or debt consolidation salesmen. If you are under financial strain, it is important to separate fact from fiction before making a decision about your next steps. Here is a list of common bankruptcy myths which paralyze people, and often lead them down a more difficult financial path.
Everyone Will Know You Have Filed for Bankruptcy
Most likely, the only people who will know about your bankruptcy case are your creditors, the trustee, your bankruptcy attorney, and anyone you tell. Although a bankruptcy filing is public information, a third party would need to go looking for your case in the federal court system after buying an account to find your petition. Bankruptcy cases are not published by any of the major newspapers in Western North Carolina.
You Will Never Get Credit Again
Although a bankruptcy case will hurt your credit score, clients are often surprised to see credit card offers fill their mailbox almost immediately after they receive a discharge. Car loans are available almost immediately to wage earners as well. Credit will cost more immediately after filing. The most important thing is not to use too much credit after filing a bankruptcy case.
Filing For Bankruptcy Will Hurt Your Credit for 10 Years
A bankruptcy case is a substantial hit to your credit. However, many times a bankruptcy case will be the first step to improving your credit score if you are presently 30 or 60 days late with some payments. A filing will end the negative reporting of late pays month after month. I frequently see clients with higher credit scores about one year after filing a case.
Filing a Bankruptcy Case Means You Are a Bad Person
A recent Harvard study revealed that over 90% of bankruptcy cases filed are caused by job loss, medical bills, or divorce. Although you may have made some poor financial decisions in the past (who hasn’t?), the bankruptcy rules were written to provide folks down on their luck with a fresh start.
You Will Lose Everything You Have
In over 95% of the bankruptcy cases I file, my clients retain ALL of their property while discharging their debts. Exemptions protect certain property from the reach of creditors and from sale by bankruptcy trustees.
You Can Never Own Anything Again
In a Chapter 7 case, the Court considers the stuff you own as of the date we file the petition. You are free to buy whatever you can afford the day after we file your case.
Filing a Bankruptcy Case is Hard
The decision to file a bankruptcy case may be hard, but filing a case is fairly easy. We need to disclose your debts, income, and assets to the Court. If we do those things well, your case will run smoothly. The hardest part of a successful bankruptcy case is paying bills after your case is over. If you can make ends meet after eliminating credit cards, medical debts, and unsecured personal loans, you are a good candidate to file a case.
If you would like to figure out your options both in bankruptcy and the alternatives outside of bankruptcy, contact me for a free initial bankruptcy consultation.
*The information contained on this website is not intended and does not constitute the providing of any legal advice or any legal opinions or services to any user thereof. The information available on or through this web page is not intended and shall not be used as a substitute for the advice and consultation provided by an attorney. Any factual examples used to illustrate concepts are hypothetical and do not depict actual events or real persons.