Bankruptcy Mythbusters to the Rescue!

If you are thinking about a possible bankruptcy filing, then call to take us up on our offer for a free telephone or office consultation.  The only way to be sure regarding your own situation is to discuss with a caring and experienced bankruptcy attorney.

Meanwhile, there is a lot of bankruptcy misinformation out there.  Following are a few of the more common myths that exist.

Bankruptcy Myth #1: If I file bankruptcy, I will lose everything.

This is a common misconception that keeps people who really should file bankruptcy, from doing so.  Federal and Michigan laws provide exemptions that can protect most assets (up to a certain value).  This protection often extends to valuable assets, such as your house, car, money in qualified retirement plans, household goods and clothing.  In fact, most people retain all their assets during the bankruptcy process.

BANKRUPTCY MYTH #2: If I file bankruptcy, can I no longer buy a car or house?

Many of our clients obtain new cars after completing bankruptcy and sometimes even during the process.  However, each lender varies in their business practices so you may need to shop around.  We even have car salesmen that specifically work with our bankruptcy clients.  Lenders take many factors into account- such as current employment, current income, and other factors in one’s credit history.

Purchasing a new home can take longer but is not out of the question.  It of course depends on current standards at the time. However, we have had clients purchase new homes in as little as two years from their bankruptcy discharge.

BANKRUPTCY MYTH #3: If you are married, both spouses must file.

If one spouse has a significant amount of debt in their name only, it may make sense for that spouse to file alone.  However, if there are joint debts, it may be wise for both spouses to file.   If there are joint debts and only one spouse files, then the creditor may still attempt to collect the debt from the non-filing spouse.

BANKRUPTCY MYTH #4: If I file bankruptcy, I will never again have a credit card account.

Many of our clients are surprised by how quickly they start getting credit card offers in the mail. By opening a new credit card and routinely making on-time payments, your credit score can quickly improve beyond pre-filing levels.  It is of course very important to monitor your credit score and to be diligent in making on time payments.

BANKRUPTCY MYTH #5: People who file bankruptcy are financially irresponsible.

There are a variety of reasons why people need to file bankruptcy, many of which are out of our client’s control.  Most often our clients need to file because of a serious personal problem such as a job loss, medical issues, or a divorce.  Unemployment, the cost of running two households following divorce, or the cost of medical care have all driven well-intentioned Americans into bankruptcy.  Once behind in such situations it can take years to catch up, if ever.  Millions of good people have filed for bankruptcy and come out stronger and more successful by doing so.

BANKRUPTCY MYTH #6: Back taxes cannot be discharged through bankruptcy.

In fact, many older federal, state and local income taxes can be discharged under the bankruptcy laws.  Our experienced attorneys will explain the qualifications that must be met; but once these are met, income taxes that were filed and have been due over three years may likely be discharged by a bankruptcy filing.

BANKRUPTCY MYTH #7: It is difficult to file bankruptcy.

Our attorneys and staff have filed several thousand cases and will walk you through the entire process. We are always accessible during business hours by both phone and email. We understand the process is new for most and are happy to answer questions and concerns throughout the bankruptcy process.

BANKRUPTCY MYTH #8: Will everyone know I filed bankruptcy?

It is unlikely anyone will know that you filed bankruptcy unless you tell them.  While bankruptcy is a matter of public record, someone would have to specifically track down the information using your personal information to find out if you filed for bankruptcy.

BANKRUPTCY MYTH #9: I cannot afford a bankruptcy attorney.

At Kerry Hettinger, PLC consultations are free. Furthermore, when filing chapter 13, we can put most of the attorney fee into the repayment plan and therefore only need to $300 plus a $25 certification fee up front ($325 to file).  

Our chapter 7 rates depend on circumstances but are most often among the lowest quotes our clients receive.  Furthermore, the full chapter 7 fee does not need to be paid until the case is actually ready to be filed.  Again, no money is needed at the first attorney meeting.

BANKRUPTCY MYTH #10: There is a minimum amount of debt to file bankruptcy.

There is no minimum amount of debt required to file for bankruptcy.  Our bankruptcy attorneys (Kerry Hettinger and Elizabeth Robinson) understand every situation is unique and will help guide you in making the best decision for you and your family.: