Bankruptcy Myths and Facts: What You Need to Know!

Are you worried about the consequences of bankruptcy? Don’t worry. Most of your concerns are probably based on old myths about bankruptcy. In reality, there are usually more advantages than disadvantages when filing for personal bankruptcy

MYTH #1: You Will Never Get Credit Again if You File For Bankruptcy.
False. Although a bankruptcy can stay on your credit report for up 10 years from the date of filing, you can start rebuilding your credit as soon as your bankruptcy is closed and discharged. Many of our clients purchase new homes, vehicles, and even qualify for credit cards a few months after the bankruptcy is concluded. In fact, most of our client receive notices from companies offering credit right after the discharge. With proper planning and counseling, you can get new credit much sooner than expected.
MYTH #2: You Can Go to Jail For Filing Bankruptcy
False. Each year, over one million people choose to file for bankruptcy, whether through Chapter 7 or Chapter 13. These are good people, just like you, who are in difficult financial situations.

While there is always 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 eliminate their debts and move on with their lives.
MYTH #3: Filing Bankruptcy Is Very Difficult and Could Result in an Audit.
Not in most cases. Filing bankruptcy is much easier than in the past. While the law requires various forms to be filled out and submitted to the court, much of this work is done electronically thanks to electronic filing.

In most cases, we simply need an intake form completed, values for your property, tax returns for the last year filed, paystubs for 6 months and a list of your debts. Our firm handles the rest. We have the necessary experience and dedication to make your filing go smoothly and efficiently.
MYTH #4: You Cannot File Bankruptcy by Yourself if You Are Married.
False. The bankruptcy laws permit anyone to file for bankruptcy, whether 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.
MYTH #5: You Can Only File for Bankruptcy One Time.
False. While the bankruptcy laws were tightened in 2005, you are still permitted to file for bankruptcy more than once, depending on when you filed and the 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.
MYTH #6: Bankruptcy Will Destroy Your Credit.
False. While your credit rating will be affected when you file, it will not be destroyed 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. All negative activity will terminate, including interest, late fees, collection fees, and attorney fees. Ten years after filing, the bankruptcy will also be removed from your credit report, revealing a clean slate.
MYTH #7: Some Creditors Can Opt Out of Bankruptcy and Can Still Sue You.
False! Sometime we see contracts that prevents a debt from being discharged. These are completely unenforceable and invalid. In fact, one of the primary reasons to file bankruptcy is to eliminate ALL 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 the creditor’s 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.
MYTH #8: Most People Do Not Qualify for Bankruptcy Because of the Means Test.
False. When the new bankruptcy laws passed in 2005, many people panicked. This sweeping bankruptcy reform called BAPCPA.

If you’re under the median income for a Georgia household of your size it is no obstacle at all. It is only over the median income debtors that BAPCPA tries to put up road blocks to filing under Chapter 7.

BAPCPA was remarkably unsuccessful in that goal. It is surprising how many over the median income debtors qualify for Chapter 7.

Rather than trying to guess whether you pass if you’re above the median income, a qualified bankruptcy attorney can ask you a few questions and probably tell you whether you pass without necessarily doing the full means test.
MYTH #9: Personal Bankruptcy Will Devastate Your Family.
Financial problems is one of the biggest reasons people get divorced. Bankruptcy can be a great way to relieve yourself from debt and focus on what is important.

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Our firm offers video consultation from the convenience of your home or in-person appointments in one of our 10 office locations.

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We invite you to contact us either online or by phone at 404-919-7296 to schedule a FREE confidential consultation to review your personal financial situation and what options we can provide to protect you from creditors. For additional information about bankruptcy please also check out our YouTube Channel which has up to date vlogs on issues related to personal bankruptcy.

Bankruptcy Myths and Facts: What You Need to Know!

MYTH #1: You Will Never Get Credit Again if You File For Bankruptcy.

MYTH #2: You Can Go to Jail For Filing Bankruptcy

MYTH #3: Filing Bankruptcy Is Very Difficult and Could Result in an Audit.

MYTH #4: You Cannot File Bankruptcy by Yourself if You Are Married.

MYTH #5: You Can Only File for Bankruptcy One Time.

MYTH #6: Bankruptcy Will Destroy Your Credit.

MYTH #7: Some Creditors Can Opt Out of Bankruptcy and Can Still Sue You.

MYTH #8: Most People Do Not Qualify for Bankruptcy Because of the Means Test.

MYTH #9: Personal Bankruptcy Will Devastate Your Family.

Schedule a FREE Bankruptcy Consultation

Expert Georgia Bankruptcy Attorneys

Saedi Law Group, LLC

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