The decision to file for bankruptcy relief is never an easy one. There are a lot of misconceptions that people have about the bankruptcy process, including how filing bankruptcy will affect them moving forward. Friends, family, and colleagues are all going to weigh in; however, it is always better to trust the opinions and advice of trained professionals. Below are some of the more common myths that people believe when it comes to bankruptcy.
This is the most harmful myth out there when it comes to filing bankruptcy, not to mention that it’s truly uninformed and simply wrong. Did you know that in 2019, more than 4,000 hardworking people near Toledo, Ohio filed for bankruptcy relief and got their fresh start? In 2020, the COVID-19 pandemic will sharply add to this number. The simple truth is that most people file for bankruptcy relief due to circumstances beyond their control, such as divorce, job loss, and sickness. Bankruptcy is rarely the result of mismanagement of finances. History is proof that some of the smartest people can fall victim to financial stresses (Abraham Lincoln, Henry Ford, and others). Filing for bankruptcy relief shows an understanding of one’s financial issues and a willingness to address them.
This myth likely dates way back to the dark days of debtor’s prisons and other medieval nonsense. Today’s bankruptcy laws offer every debtor a large number of “exemptions” so that he or she may protect as much of their property as possible. While Chapter 7 bankruptcy is referred to as “liquidation,” it is much less common for one’s assets to be at risk under the current laws. Generous exemptions exist and can limit risk related to your residence, vehicle, some cash, retirement accounts, and most household goods. Discuss your specific concerns with your experienced bankruptcy attorney. It’s never as bad as the myth.
It’s a bit more complicated than that. While many debts can be discharged in Chapter 7 bankruptcy, there are some debts that may survive after Chapter 7 bankruptcy, such as most taxes, student loans, child support, criminal restitution, overpayment of benefits, and some others. Many debtors prefer Chapter 7 bankruptcy because in most cases it does wipe out one’s growing unsecured debts such as credit cards, medical bills, repossession deficiencies, and much more. Your experienced Chapter 7 bankruptcy attorney can review your debts and explain what you can expect following a Chapter 7 bankruptcy filing.
This may surprise some people, but individuals who file for bankruptcy relief often end up getting offers for credit cards and car loans in the mail, literally days after filing for bankruptcy relief. Often, lenders consider someone who has filed for bankruptcy a better credit risk because that individual has discharged a lot of their obligations and will not be able to file for bankruptcy again for up to eight years. While debtors who have filed for bankruptcy typically find higher interest rates, the focus should be more on keeping such cards paid off and rebuilding your credit score organically. They call it a fresh start for a reason, so focus on the rebuilding.
At France Law Group, we are here to help people with the bankruptcy process.
We know that this is a stressful time and we will be with you every step of the way.
Your fresh start beings here.
Contact us today to schedule your free initial consultation. 419.725.9300.