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(Also See Videos At
Bottom)
You know all those bad things
....you've
always heard about bankruptcy.
Most of it is
NOT TRUE....and I'll prove it....right here...right now.
Here are the Top
15 Myths your creditors want you to believe
...and the reason why every one of them is NOT
TRUE.
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Myth 1: Everyone will know you have filed for bankruptcy.
Unless you're a prominent person or a major corporation and the filing is
picked up by the media, the chances are very good that the only people who
will know about a filing are your creditors and the people who you tell.
While it's true that your bankruptcy is a matter of public record, the
number of filings is so massive, that unless someone is specifically trying
to track down information on you, there is almost no likelihood that anyone
will even know you filed. However...telling someone that someone else filed
bankruptcy is good gossip...just like telling a someone you heard so-and-so
is getting a divorce. So...if you don't want everyone you know to know you
filed bankruptcy....you need to keep the information to yourself. As for
newspapers...my experience is that most papers don't include information
about who filed bankruptcy.... and even if they did...think about it....who
would be interested enough to read that stuff.
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Myth 2: You will lose everything you have.
Nothing could be further from the truth. The fact is....most people who
file bankruptcy don't lose anything.
First....while laws vary from
State to State, every State has exemptions that protect certain kinds of
property. Using North Carolina as an example.....there are exemptions to
protect such things as your house, your car, your truck, household goods and
furnishings, IRAs, retirement plans, the cash value in life insurance,
wages, and personal injury claims. There is even a "wildcard"
exemption of $3,500 per person that can be applied wherever you want it. In
those rarer situations where you have more property than can be protected by
available exemptions...there is Chapter 13. In Chapter 13...you can even
keep this property by paying a higher Chapter 13 plan payment.
Second.....as mentioned above
(Myth 2)....filing bankruptcy does not generally wipe out liens.
Therefore...if you want to keep a car, truck, home or business equipment
that serves as collateral for a loan....you need to keep paying on the debt.
If you make these payments and have exemptions to cover any value above what
is owed....you can rest assured you will be able to keep these items.
Myth 3: You will
never be able to own anything again.
A surprising
number of people believe this....but this is completely false. In the
future...you can buy, own and possess whatever you can afford.
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Myth 4: You will never get
credit again.
Quite the contrary. Filing bankruptcy gets rid of debt....and getting rid of
debt puts you in a position to handle more credit....and this makes you look
more attractive to would-be lenders. In my
experience.....unfortunately....it won't be long before you're getting
credit card offers again. I say "unfortunately" because I don't
want you to get right back in debt again. At first...the would-be lenders
will want more money down and will want to charge you higher interest rates.
However....over time....if you are careful, and keep your job, and start
saving money, and pay your bills, and do things that will put good marks on
your credit report....the quality of your credit will get better and better.
Generally...in my experience...if a client has not re-established good
credit in 2 to 4 years...sufficient to buy a car or even a house....it's not
because they filed bankruptcy. It generally means that something else has
happened after the bankruptcy to hurt their credit.
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Myth 5: Filing bankruptcy
will hurt your credit for 10 years.
Not true. You are getting 2 completely different concepts confused with each
other. You are getting the fact that bankruptcy is reported on your credit
report for 10 years mixed up with the effect that reporting will have on
your credit. Just because something is reported on your credit report does
NOT necessarily mean it will have a negative effect on your credit standing.
First...let's get one thing
out in the open. By the time you need to make an appointment to see a
bankruptcy attorney.....your credit is already messed up or maxed out...or
both. This being the case....you have no credit for bankruptcy to hurt.
Furthermore...as I mentioned
above...in my experience...if you have not re-established good credit in 2
to 4 years after you file bankruptcy.....most likely....it has nothing to do
with the fact that you....once upon a time....filed bankruptcy...and it
certainly has absolutely nothing to do with the fact that your credit
history still shows an old bankruptcy.
Myth 6: If you're
married...both you and your spouse have to file
for
bankruptcy.
Not true. In many cases...where both husband and wife have a lot of
debt....it makes sense and saves money for them to both file....but it is
never a requirement under the law. We have many cases where only one spouse
has filed. The good news is that generally....if it makes sense for both
spouses to file together....they can both file for the price of one filing.
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Myth 7: It's really hard to file for bankruptcy.
No....it's not....at least not in the hands of an experienced bankruptcy
attorney. In the hands of an experienced bankruptcy attorney...filing
bankruptcy is easy. The decision to file may be hard...but once the decision
is made...the filing part is easy.
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Myth 8: Only deadbeats
file for bankruptcy.
Not true. Most of the people who file bankruptcy are good, honest,
hard-working people...just like you and me....who file as a last
resort....after months or years struggling to pay the bills that left over
from some life-changing experience, such as a divorce, the loss of a job, a
failed business venture, a serious illness, or some family emergency...or
because they honestly and mistakenly fell into debt at a young age before
they knew better...before they knew anything about budgeting or how to
manage money.
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Myth 9: Filing bankruptcy
means you're a bad person.
Not true. There's a reason over 1,000,000 Americans file bankruptcy each
year...and it's not because they're bad people. Lots of good, honest,
hard-working people fall on hard times. Let's face it....life can be
brutal....and sometimes...the money's just not there. The bankruptcy law
were created with this in mind...to make sure you have a way....if need
be....to get free from the burden of debt...so that you...and your
family....can have a second chance at a "fresh start".
Myth 10: Filing for
bankruptcy will hurt your credit.
That's not true. Think about it. By the time you come to a bankruptcy
attorney....your credit is already either messed up or maxed out. And if
it's already messed up or maxed out....how can bankruptcy hurt it?
The big surprise for my
clients is when I tell them that filing bankruptcy can actually help them
re-build their credit. Bankruptcy gets rid of debt....and getting rid of
debt puts you in a better position to handle new credit....if only someone
will give it to you. Therefore....bankruptcy is the first step in the
process of re-building your credit.
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Myth 11: Even if you file
for bankruptcy, creditors will still
harass you and your family.
This is NOT true. In fact, nothing could be further from the truth. The
minute you file bankruptcy, the Bankruptcy Court issues an order telling all
of your creditors to leave you alone. No more phone calls. No more
collection letters. No more lawsuits. No repossessions. No foreclosures.
Nothing. This order has a name. It is called the "automatic stay";
and it is issued pursuant to 11 United States Code, Section 362. The
automatic stay prohibits you from any and all collections actions. After you
file bankruptcy, the creditor is not even allowed to talk to you. In
addition, the creditor must stop any collection attempts already started.
The automatic stay is very powerful, and puts the full weight of the United
States Courts to work for you, to make sure your creditors leave you alone.
If a creditor violates the automatic stay, you have the right to bring the
creditor before the Court for Contempt of Court, and to be compensated
accordingly. Believe me, Bankruptcy Court Judges do not take kindly to
creditors who ignore the automatic stay, and these Judges have been known to
punish creditors severely. Very simply, once you file for bankruptcy,
creditors must leave you alone or suffer the consequences.
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Myth 12: If you file for
bankruptcy, it may cause more family
troubles and may even lead to divorce.
This is NOT true. Usually, it works just the opposite. Filing bankruptcy
is not the problem. The problem is not being able to pay your bills. All
good, honest, hard-working people feel a strong need to pay their bills, and
not being able to do so, causes them to feel tremendous stress. Unless you
do something to relieve this stress, the stress can quickly build to the
breaking point....the marriage breaking point. Bankruptcy is designed to get
you out from under the burden of debt, to protect your property and to lower
your stress level. If your experience is like that of other couples, you
will find that filing bankruptcy... and lowering the stress level.... can be
a crucial first step in bringing the love and caring back into your
relationship....which.....in turn.....gives your marriage a fighting chance.
Myth 13: You can't get rid
of back taxes through bankruptcy.
We get rid of old "income" taxes for our clients all the time. By
"old"...I mean income taxes more than 3 years old. Under the
law...there are 3 or 4 qualifications that have to be met....but once these
are met....these taxes are gone. Please note: Filing bankruptcy does NOT get
rid of withholding or sales taxes...no matter how old they are.
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Myth 14: You can only file
once for bankruptcy protection.
The truth is....you can only file for a Chapter 7 bankruptcy once every 6
years....but after 6 years...if need be...you can file again. As for filing
a case under Chapter 13 of the Bankruptcy Code....there is no such
restriction. Hopefully...however...you will never need to file more than one
bankruptcy.
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Myth 15: You can pick and
choose which debts and property
to list in your bankruptcy.
I'm sorry...but you can't. Doing so would be against the law. Under the
law...when you file bankruptcy...you have to list all your property and all
your debts. Most people want to leave out a debt because it is their intent
to keep paying on it. The good news....on this score....is that you can
achieve the same goal, even though you have to list the debt. If you want to
keep paying on a debt...after bankruptcy....you can. After bankruptcy....you
can go back and pay anybody you want. In fact...after you file
bankruptcy....there are some debts you have to keep paying on. For
instance....if you have a car, truck or house loan....even though you list
the debt in your bankruptcy....if you want to keep the car, truck or
house....you have to keep paying on the debt. More importantly....you need
to know this. As long as you stay current on the loan...and keep the
property properly insured....you are protected under the law .... and you
get to keep the property....because...under the law...the creditor is stuck
with you and can't do anything about it.
Watch our
videos!
Will I Lose Everything?
Real Video | Windows
Media
Misconceptions
About Bankruptcy
Real
Video | Windows
Media
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