DISPELLING BANKRUPTCY MYTHS
Filing for bankruptcy is not a quick or easy decision for most people. It is also a highly personal decision. Those pondering bankruptcy usually spend considerable time researching the process and may solicit opinions from close friends or family members they trust.
What you read online, stories you hear, and advice and opinions offered by well-intentioned confidants are not always accurate. When you are making a decision of such consequence, you need to do so based on facts rather than fiction.
At the Winter Law Group, we provide clients with the unvarnished truth about filing for bankruptcy. If you live in Fresno, Clovis, Madera, Merced, Visalia, or in Merced or Madera counties, California, we can provide you with the facts you need to file or not to file for financial relief.
Here are some common myths about bankruptcy you should know the truth about.
Myth 1: Filing for bankruptcy marks me as a financial failure.
On the contrary, filing for bankruptcy may be the smartest financial decision you have made to date. Bankruptcy is designed to relieve the pressure of oppressive debt, regardless of how you incurred so much debt. When there is no way you can ever get out of debt, and when you no longer have the money to spend on basic living expenses, bankruptcy is a smart choice. Inherent in the bankruptcy process is learning how to make wiser financial decisions in the future. Everyone deserves a second chance.
Myth 2: I will lose everything I own if I file for bankruptcy.
There are exempt and nonexempt possessions in bankruptcy. The process exempts some items necessary to live and work. It is true that you may surrender non-exempt possessions of value to be liquidated to pay creditors in a Chapter 7 bankruptcy. If you are unable to make payments on the loan securing your car or home in Chapter 7, you may need to surrender those as well.
Chapter 13 bankruptcy does not discharge your debt like Chapter 7 does. Instead, your debt is reduced and payments restructured to make them more affordable. You pay off the debt over three to five years. Because you continue making payments on debt, you will not lose your possessions.
Myth 3: Debt consolidation is a better option than bankruptcy.
It is true that a debt consolidation loan will not lower your credit score as much as bankruptcy will. It is also true that because debt consolidation is not a legal process, it is not a matter of public record. If you can obtain a sufficient debt consolidation loan and afford to make the payments on that debt, it might be the right choice for you.
However, debt consolidation does not provide you with the protection from creditors afforded in bankruptcy. You may need to secure a debt consolidation loan with the deed to your home or the title to your vehicle, which puts them at risk should you default on the loan. Plus, although those offering debt consolidation loans purport that you will pay less on the debt over time, that certainly isn’t always the case.
If you can afford to continue making payments on your debt, Chapter 13 bankruptcy may be a better choice. You can protect your home, vehicle, and other possessions while enjoying protection from creditors.
Myth 4: My credit score will never recover from bankruptcy.
Chances are, if you are considering bankruptcy, your credit score is already poor. Continuing to struggle with debt will keep it there or damage it even more. Although bankruptcy may lower your score even more for a time, it doesn’t lower it forever.
A Chapter 7 bankruptcy will remain on your credit report for 10 years. In exchange, however, you have had all your debt discharged and will be able to immediately begin working on rebuilding your credit score. A Chapter 13 bankruptcy remains on your credit report for seven years. Again, by repaying your debt more affordably, you will be able to begin rebuilding your credit right away.
Myth 5: Creditors will continue to harass me after I file for bankruptcy.
One of the great benefits of bankruptcy is the protection the legal process provides against creditor harassment. If you are in significant debt, you are likely being contacted by debt collectors constantly. The stress can be unbearable and the embarrassment, excruciating.
When you file for bankruptcy, the first action taken by the court is to issue a stay against all creditors whose debt is listed in the bankruptcy. They are prohibited by the order from contacting you, from repossessing anything securing the debt, and from going to court and obtaining a judgment against you. You have legal recourse against any creditor who breaches the stay order.
Getting Help from an Experienced Bankruptcy Attorney
There are a tremendous number of considerations you need to make when deciding whether to file for bankruptcy. What you hear from other people may or may not be accurate. Basing your decision on that type of information is not wise.
Choosing to work with an experienced bankruptcy attorney like those at the Winter Law Group is a wise decision. We will get a comprehensive financial picture of your unique situation, explore all the available options you have, and make sure you’re working with facts.
Ultimately, only you can decide what to do, but the Winter Law Group in Fresno, California, can provide the input you need. Call us now to get started.