If you’re smothering under a mountain of debt, the idea of filing for bankruptcy must have crossed your mind. But, like many people, you’re afraid to even consider it. This fear may be caused by the many misconceptions surrounding bankruptcy. Let’s take a look at some of these bankruptcy myths and see if we can get to the truth.
Myth #1: I can’t file for bankruptcy.
Because of certain laws passed in the early 2000s, many people mistakenly believe they cannot file for bankruptcy. This is not true. The process may be a bit more complicated now, but most people can easily file for bankruptcy by retaining an experienced bankruptcy attorney.
Myth #2: Filing for bankruptcy will mean I’m a failure or a bad person.
Nothing could be further from the truth. Many notable people have had to file for bankruptcy at some point in their lives, including Presidents Jefferson, Lincoln, Grant, McKinley, and Trump. Other successful people who have sought debt relief through bankruptcy include Henry Ford, Walt Disney, Milton Hershey, H.J. Heinz, and J.C. Penney to name a few. Life happens, and bankruptcy was designed to help hardworking people get a fresh start if they get into financial trouble.
Myth #3: My reputation will be ruined.
Unless you are particularly famous, no one will know about your bankruptcy except your creditors and the people you choose to tell. It’s not like you’re going to have to wear a scarlet letter B around your neck.
Myth #4: I’ll lose everything I own.
A lot of people believe this myth, but it’s just not true. In California you get to keep your house, car, retirement plan, household goods, clothing, personal effects, personal injury claims, tools of trade, burial plot, and more. An experienced San Fernando Valley bankruptcy attorney can help you protect your assets.
Myth #5: I’ll never be able to get credit again.
On the contrary, filing bankruptcy erases your debt, making you look more attractive to creditors. This is both good and bad. It’s good because you can get credit, bad because you don’t want to get into debt trouble again. Immediately after your bankruptcy is complete, you’ll start getting credit card offers. The problem? They will have extremely high interest rates. It’s best to avoid these credit cards and build up a strong credit rating before accumulating debt again.
Myth #6: Bankruptcy will ruin my credit score for the next 10 years.
While a bankruptcy may stay on your credit report for the next 10 years, that doesn’t necessarily hurt your credit rating. If you’re considering filing bankruptcy, your credit is already in pretty bad shape. A bankruptcy will get rid of your debt and allow you to start building a better credit rating.
Myth #7: I’ll never be able to own anything again.
This is not true. Filing bankruptcy does not prohibit you from buying or owning property. In fact, getting rid of your debt burden through bankruptcy makes it easier to get a loan to buy property.
Myth #8: I’m married, so my spouse will have to file for bankruptcy also.
Not true. Though in many cases it makes more sense for you and your spouse to both file for bankruptcy (if you both have a lot of debt), it is not required. The good thing is that you and your spouse can both file for bankruptcy for one fee.
Myth #9: Creditor will still harass me and my family after bankruptcy.
This is the most blatant myth of all. The minute you file bankruptcy, the court will issue an "automatic stay." This prevents creditors from contacting you. This means no calls, no letters, no lawsuits, no repossessions, no foreclosures. Nothing. You will be off-limits to them.
We hope we’ve debunked some of the more harmful myths surrounding bankruptcy for you. Bankruptcy is a perfectly legal option for people who, for whatever reason, have found their lives severely complicated by debt. If you want to sit down with the legal team at Nader & Berneman and discuss your options for getting out of debt and getting your life back, call (818) 788-5008 for a free consultation.