Bankruptcy Misconceptions

Contact Bankruptcy Attorney Robert P. Soto of Billmaier & Cuneo, LLC, today by calling 419.931.0067 (Ohio) or 734.568.0136 (Michigan).

Bankruptcy has long been associated with various myths and misconceptions, which have often played a role in many individuals refusal to file bankruptcy despite their continual financial struggles.

For your convenience, your attorney will discuss the most common misconceptions, so that you know the truth about various bankruptcy myths which hold people back from getting on the road to financial recovery.

• All debts are wiped out in Chapter 7 bankruptcy. While most debts may be discharged in a Chapter 7 bankruptcy, there are exceptions which may not be discharged such as: child support payments, alimony payments, student loans, and debts incurred as the result of fraud.
  
  
• I will lose everything if I file for bankruptcy. This is one of the most common bankruptcy misconceptions that often instill fear of filing for bankruptcy, especially for those who people who may be best served by filing for bankruptcy. Many people are confused about how their possessions will be affected as a result of a bankruptcy. In most bankruptcy cases, you may be allowed to keep certain kinds of assets, such as your home, your car (up to a certain value), money in qualified retirement plans, household goods and clothing. Bankruptcy laws differ from State to State, however, the sound advice of your bankruptcy attorney may be the difference in achieving your bankruptcy goals and needs. Being informed and represented by professional legal counsel is highly recommended in any bankruptcy case.
  
  
• I'll never get credit again. In many cases, a successful bankruptcy may actually help you improve your credit over time. Many individuals and families have reported being offered credit cards, being approved for car loans, and other types of credit within 2 to 3 years. While the interest rates will initially be higher, using your newfound credit wisely will re-establish your credit, provide you a higher credit score, and eventually lower the interest rates you are offered.
  
  
• If you're married, both spouses have to file for bankruptcy. This is not always the case, and in some circumstances it is actually advisable to have one spouse file bankruptcy as an individual if that spouse has significant debt in his or her name only. In the case where both spouses have debts that they want to discharge for which they are both liable, it is advisable for the spouses to file bankruptcy together. Otherwise, creditors will simply demand payment for the entire amount from the spouse who did not file.
  
  
• It's very difficult to file for bankruptcy. Bankruptcy laws can be confusing. However, with the help of experienced legal counsel, the bankruptcy process may actually be easier than most people would think. To ensure the bankruptcy process goes as smoothly as possible with a reduced possibility of complications, it is recommended that you hire a bankruptcy attorney (lawyer) to make sure that all steps are properly administered.
  
  
• It is immoral and shameful to file bankruptcy. Not true at all. Especially in the current state of our economy. People file for bankruptcy for various reasons including following a divorce, loosing a job, failed investments, after the death of a spouse, after dealing with a serious illness, becoming injured and unable to work, or a host of other reasons. The important thing to remember is that a successful bankruptcy allows you to get a fresh start, and gives you the ability to rebuild your credit in a manageable and responsible manner.
  
  
• I should not include certain creditors in my filing because it's important to me to pay them back someday and if the debt is discharged, I can't ever repay them. Every creditor should be listed on your petition whether or not you plan to repay that particular debt. Simply listing a creditor on your petition does not prevent you from repaying that debt.
  
  
• You can't get rid of back taxes through bankruptcy. Generally speaking, this is true in most cases. However, the current law allows specific exceptions. To have a chance of success, you have to file all your tax returns and the taxes owed, and the taxes must be at least three (3) years old. To find out if you qualify for an discharge for back taxes in a bankruptcy, you should seek experienced legal counsel who can advise you of your legal rights.
  
  
• You can only file for bankruptcy once. This is not true. Depending upon the type of personal bankruptcy you file, there are time restrictions on how long you must wait before you are able to file for bankruptcy again. In a Chapter 7 personal bankruptcy, you can only file once every eight (8) years. While multiple bankruptcies are allowed under specific guidelines, additional bankruptcies will be heavily scrutinized, and it is not in your best interest to make filing bankruptcy a habit, as the potential for being awarded a successful discharge may be dramatically reduced with each additional bankruptcy you file.
  
  
• I can max out all my credit cards, file for bankruptcy, and never pay for the things I bought. First of all, it is important that to note that when a creditor contacts you, the phone conversation is typically recorded, as well as all correspondence saved. Many times in anger or frustration, an individual who is being harassed by creditors may make statements which may allude to this being their intention. If the creditor can present such evidence, the judge who presides over your bankruptcy case may not rule in your favor or grant you a discharge. You may also end up being charged with fraud, as it is illegal to intentionally purchase items because you are intending to file bankruptcy, and having the accrued debt included in the bankruptcy. If you are charged with fraud, it is a serious criminal offense which will be aggressively prosecuted. In short, if you are contemplating filing for bankruptcy, speak to an experienced attorney so that you are made aware of purchasing habits which may send up red flags or cause complications in your bankruptcy case.
  
  
• Everyone will know I've filed for bankruptcy. Even though bankruptcy is a public proceeding, generally the only people that are aware of your bankruptcy are your creditors and those who run credit checks after your bankruptcy. Chances are that a recent bankruptcy will not affect your future life choices as much as one would think. Current employment status and work history is typically more important in many situations, and this also holds true following a bankruptcy.
  
  

Robert P. Soto and the attorneys of Billmaier & Cuneo, LLC are committed to offering individual analyses, early assessment, efficient service and quality representation in a timely manner regarding your Bankruptcy issues.

Contact Robert P. Soto, an experienced Bankruptcy Attorney at the law offices of Billmaier & Cuneo, LLC. Call 419.931.0067 (Ohio) or 734.568.0136 (Michigan).