This page discusses several myths related to the bankruptcy process. If you would like to discuss your specific situation or would like additional bankruptcy related information, contact The Gorski Firm, APC for a Free Consultation. Please select from the following list Bankruptcy Myths:
Myth: I will lose my car and house.
Fact: Most likely you will not lose your home, car, or other assets and property during the bankruptcy process. Bankruptcy was designed to help people who have fallen behind financially or who are struggling with insurmountable debt. In the majority of the bankruptcy cases, we are able to keep our clients' homes, cars, and other assets. Bankruptcy was not designed to punish you by selling your home or car. However, note that if the bankruptcy court reviews your list of assets and notices that you are living well-beyond your means, or that you are constantly making purchases you cannot afford, they may seize some of your assets.
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Myth: If I file for bankruptcy protection, I will never be able to purchase a car or home again.
Fact: False. It usually takes about two years after bankruptcy before you can purchase a house and even less time to purchase a car.
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Myth: My credit will be ruined for 10 years if I file for Bankruptcy.
Fact: False. While it is true that a bankruptcy generally remains on your credit report for 10 years, the effect of bankruptcy on one's ability to get credit is vastly overstated. Many people are able to restore and rebuild their credit within just a few years after filing for bankruptcy. What normally ruins credit is the failure to pay bills or debts on time. After you file for bankruptcy, all of your current debts will be discharged, which means you will have a chance for a clean slate. If you pay all of your bills on time after the discharge, you will see your credit score improve eventhough you have a bankruptcy on your credit report.
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Myth: I cannot get new credit after filing for bankruptcy.
Fact: False. This myth runs hand in hand with the last myth regarding "ruined credit." Many people are surprised to find that they actually have an easier time obtaining credit after filing for bankruptcy. It is often easier to obtain credit after filing for bankruptcy because prior to filing, there was a bunch of unpaid debt listed on your credit report. After you are granted a discharge, the majority of that debt has been completely "wiped out" forever. As far as the credit companies are concerned, assuming that you have income, you are a more desirable candidate for credit because you are like a clean slate without any debt. In fact, it takes usually only one year or so after a bankruptcy discharge to acquire new credit lines.
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Myth: My spouse will be held liable for my debt.
Fact: This is not always the case. Whether your spouse is liable for your debts depends on the facts specific to your case. The only way to tell for sure if your spouse will be liable for your debt is to consult an experienced bankruptcy lawyer. A bankruptcy discharge affects the personal liability only of the debtor in the case. When one spouse gets a discharge, the creditor can collect the debt from the non filing spouse, if that spouse is personally liable for the debt. However, if the filing and non-filing spouses are still married, creditors dischared in the filing spouse's bankruptcy cannot collect debt from community property acquired after the bankruptcy was filed.
If you contact The Gorski Firm, APC for a Free Consultation, we will review your case and your financial situation, and help you determine how a bankruptcy filing would affect both you and your spouse.
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Myth: Debt counseling can help me eliminate my debts and avoid bankruptcy.
Fact: False. It’s extremely important to understand that debt counselors cannot help you eliminate debt. The only way to eliminate debt is to pay it down or file for bankruptcy. The most effective way to file for bankruptcy is to retain the services of an experienced bankruptcy lawyer. The only services a debt counselor can provide are to help you manage existing debt and negotiate new payment terms with your creditors. Becareful of debt counselors that promise to "erase" or "eliminate" debt.
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Myth: The bankruptcy court will contact my employer and notify it of my discharge.
Fact: False. The bankruptcy courts will not notify your employer of your bankruptcy discharge. However, bankruptcy is a matter of public record. Thus, if your current or future employer conducts a background check, it may discover that you filed for bankruptcy.
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Myth: My employer can fire me because I filed for bankruptcy.
Fact: False. It is illegal for an employer to fire or discriminate against someone solely by reason of his/her having been a debtor, having been insolvent prior to discharge, or having failed to pay a dischargeable debt.
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Myth: I can go to jail if I don’t pay my debts.
Fact: False. Even if you are sued or a judgment is obtained against you, you will not be sent to jail for failing to make payments toward your debts. However, if you fail to make payments to the IRS, the outcome may be different, especially if your debts to the IRS are based on fraud or tax evasion.
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Contact the Gorski Firm, APC for a Free Consultation
For more information regarding bankruptcy law, or to speak with an experienced Bankruptcy attorney, please do not hesitate to contact The Gorski Firm, APC to set up a free, no-hassle consultation.