TOP 10 BANKRUPTCY MYTHS
If you are considering Bankruptcy, you probably have numerous concerns about the consequences involved. You can stop worrying. Most of your concerns are likely based on old myths and misconceptions about Bankruptcy. Even today, in our crippled economy, many creditors work hard to promote these erroneous myths. There is an obvious reason for their aggressive tactics and tricks: they want to get paid. Creditors know that Bankruptcy can help eliminate these debts, and they will say almost anything to collect on the debt. In reality, there are usually more advantages than disadvantages when filing for Bankruptcy.
As a dedicated Fort Worth Bankruptcy attorney, I am committed to educating potential and ongoing clients about consumer Bankruptcy. Here are the TOP TEN Bankruptcy myths to watch out for when deciding if Bankruptcy is right for you:
- MYTH #1: You Will Never Get Credit Again if You File For Bankruptcy. This is not true. Although a Bankruptcy can stay on your credit report for up to 7 years (in Chapter 13) or 10 years (in Chapter 7), you can start rebuilding your credit as soon as your Bankruptcy is closed and discharged. Many of my clients purchase homes, vehicles, and even qualify for credit cards a few months after their Bankruptcy is concluded. In fact, many creditors will start offering credit right after the discharge. Some creditors will even lend to you while you are in Bankruptcy, especially if you need a vehicle or other necessity. With proper planning and counseling, you can begin a new financial life much sooner than expected, despite the misguidance of the credit industry. As a Fort Worth debt relief agency, the Law Office of Michael P. O’Donnell can properly counsel you on this important issue and get you on the path to financial freedom.
- MYTH #2: Lenders Will Ignore You if You File for Bankruptcy. This is not true. After Congress passed the new Bankruptcy laws in 2005, much of the stigma associated with Bankruptcy vanished. Many creditors and lenders realize the problems with our current economy and the effect of this crisis on consumers. As such, many lenders will offer credit to those affected by Bankruptcy and are more than willing to work with people in your very situation. While your interest rates may be higher, you can still get credit, despite a Bankruptcy filing. As a Fort Worth Bankruptcy attorney, I can properly counsel you on this important issue and explain the other advantages to consumer Bankruptcy.
- MYTH #3: People Who File for Bankruptcy Are Stealing and May Go to Jail. This is not true. Each year, over one million people choose to file for Bankruptcy, whether through Chapter 7 or Chapter 13 of the U.S. Bankruptcy Code. These are good people, just like you, who are in difficult financial situations. While there can be a bad seed in every group, the majority of Bankruptcy filers are in desperate need of relief and turn to the advantages of Bankruptcy to assist them through this difficult time. Whether you lost your job and can’t pay your credit cards, or became ill or injured and incurred significant medical bills, you are not a bad person for choosing Bankruptcy relief. Congress created the federal Bankruptcy laws to assist hard-working people to eliminate their debts and move on with their lives. If you are facing this type of hardship, my office can help. The Law Office of Michael P. O’Donnell can evaluate your situation and determine the best option for you and your family.
- MYTH #4: Filing Bankruptcy Is Very Difficult and Could Result in an Audit. Filing Bankruptcy is much easier today than several years ago. Many Americans become overwhelmed by the thought of Bankruptcy and the paperwork involved. While the law requires various forms to be filled out and submitted, much of this work is done over the computer and submitted electronically. In most cases, we simply need bank statements, the most recent tax return, paycheck stubs for 6 months, and an intake form completed. My office does the rest. As a dedicated debt relief agency, we have the necessary software to assist you with the Bankruptcy process, making your filing go smoothly and efficiently. After filing, a Trustee assigned to your case may require additional financial documentation, but audits are extremely rare (the current audit rate is approximately 1 out of every 1000 cases filed). In the rare instance of an audit, I have successfully assisted clients through the process with no problems.
- MYTH #5: You Cannot File Bankruptcy by Yourself if You Are Married. This is not true. The federal Bankruptcy laws permit any debtor to file for Bankruptcy either individually or jointly. If you are married, you and your spouse must decide if a joint filing is necessary. For example, if you and your spouse have joint debts together, such as a mortgage, credit cards, and/or loans, then filing together makes sense. The Bankruptcy will help eliminate or restructure these joint debts. However, in new marriages, where one spouse has good credit or no joint debts, it may be smarter for the other spouse to file individually to eliminate his or her own debts. There are numerous issues to consider when filing, including exemptions and joint property, so it is imperative to speak with an experienced Bankruptcy attorney before moving forward. As a dedicated Bankruptcy lawyer in Fort Worth, I can properly advise you about this important decision and help determine the best course of action.
- MYTH #6: You Can Only File for Bankruptcy One Time. This is absolutely false. While the Bankruptcy laws became stricter in 2005, you are still permitted to file for Bankruptcy more than once, depending on the prior and current type of Bankruptcy. In Chapter 7, you can receive a discharge once every 8 years, and in Chapter 13, you can receive a discharge every 2 years. If you get discharged through Chapter 7, you have to wait 6 years before obtaining a discharge through Chapter 13. If you obtain a Chapter 13 discharge, you must wait 4 years before getting a discharge through Chapter 7. If your prior case was dismissed, there is typically no waiting period to re-file (although a case dismissed “with prejudice” will have a waiting period attached). In these situations, it is crucial to contact a knowledgeable Bankruptcy attorney, as there are certain Motions that must be filed in order to extend the Bankruptcy protection in your current case. The Law Office of Michael P. O’Donnell has the knowledge and experience to guide you through this process. I have assisted numerous clients with subsequent filings.
- MYTH #7: Bankruptcy Will Destroy Your Credit Rating. While your credit rating will be affected when you file, it will not be ruined forever. Depending on your situation and level of debts, you may actually increase your credit score by filing for Bankruptcy. Bankruptcy helps eliminate the negative consequences of your unpaid debts, whether you file under Chapter 7 or Chapter 13. The negative consequences of your unpaid debts, including interest, late fees, collection fees, and attorney fees terminate once you file. The discharge of your debts through Bankruptcy ultimately helps your credit score. As a Fort Worth Bankruptcy attorney, I can show you how this works during a FREE legal consultation. I can run a special credit report for you that predicts how a Chapter 7 or Chapter 13 can actually increase your score after filing. Every case is unique, and sometimes the score does not change. But it’s worth a quick review to see if your rating will increase through the Bankruptcy process.
- MYTH #8: Creditors are Immune from the Bankruptcy and Can Still Sue You. This is absolutely false. In fact, one of the primary reasons to file Bankruptcy is to eliminate ALL debt collection activities. When you file the Bankruptcy petition, whether through Chapter 7 or Chapter 13, you and your property receive automatic protection from the Court against your creditors (known as the “automatic stay”), which also includes their attorneys, collection agencies, representatives, and/or agents. Federal law specifically prohibits your creditors from contacting you for any reason, including through written correspondence, monthly bills, or phone calls. Creditors must cease all collection efforts against you, meaning they cannot file a new suit, continue a prior lawsuit, or collect on a prior legal judgment. If you have been sued by a creditor or have received a judgment against you, it is important to call us today. As an experienced attorney who focuses on Bankruptcy in Texas, I can help you understand the Bankruptcy process and protect you from ongoing and future creditor harassment.
- MYTH #9: Most People Do Not Qualify for Bankruptcy Under the New Laws. This is not true. When the new Bankruptcy laws passed in 2005, many debtors became frantic. Creditors tried to convince the country that Bankruptcy would only apply to a small percentage of poor and destitute people. This was a massive distortion of the new laws. In reality, the 2005 legislation changed the method in which debtors qualify for Bankruptcy under the Means Test, but it did not prevent people from filing. In fact, Bankruptcy filings have actually increased greatly since the new laws were enacted, especially in light of the recent foreclosure crisis. There are some additional requirements, such as credit counseling courses, but these are easy to accomplish online and my office can provide the necessary information for this new requirement. Don’t believe what you hear — whether on television, in the paper, or from friends or family members. To learn the truth about the current laws under Chapter 7 and Chapter 13, give me a call. Let’s meet to discuss the truth about Bankruptcy and how it can help you and your family. I can explain the Bankruptcy process in easy to understand terms and determine if you qualify for relief.
- MYTH #10: Bankruptcy Will Affect Your Family. Lots of things lead to family problems, but Bankruptcy may actually create a solution. You may be on the brink of divorce because of your financial crisis. In some cases, you can put a stop to the family problem by filing for Bankruptcy and getting a fresh, financial start. Although filing for Bankruptcy can be a very difficult decision in your life, the absence of financial stress may give your relationship a fighting chance.
LEARN MORE ABOUT BANKRUPTCY RELIEF TODAY
Despite recent changes in the federal Bankruptcy laws, many of our clients continue to be eligible for Bankruptcy relief under Chapter 7 and Chapter 13. As a dedicated and experienced Fort Worth Bankruptcy attorney, it is my goal to help you through this difficult time. I would be happy to meet with you and explain the differences between Chapter 7 and Chapter 13 Bankruptcy. To schedule a FREE consultation, please contact me at (817)-732-7590 or (972)-819-3861. You can also send an E-mail or complete the Free Case Evaluation.