Medical expenses, job loss, and divorce are the leading causes of bankruptcy. If you are in financial turmoil dealing with wage garnishments or bank levies, bankruptcy may be the right option for you. Our knowledgeable attorneys can debunk common bankruptcy myths and take the fear out of its process.
Myth # 1: You will lose your house and cars.
Many assets are protected by exemptions in a Chapter 7 bankruptcy which could protect your home, vehicles, pensions, furniture, clothing and household items.
Myth #2: Judgments cannot be discharged in bankruptcy.
This is simply untrue. Most judgments can be discharged in bankruptcy, and once a bankruptcy petition is filed with the court, an automatic stay will be issued that will stop all wage garnishments and bank levies.
Myth #3: I will not be able to obtain credit for seven years.
People confuse the amount of time the bankruptcy is on the credit report with how long on average it takes to recover credit. Often lenders are eager to extend credit to recent bankruptcy filers as often your debt-to-income ratio has drastically improved. Options such as secured credit cards are usually available to immediately start rebuilding your credit.
Myth #4: Taxes cannot be included in bankruptcy.
If certain conditions are met, a person may be able to discharge tax obligations that are more than three years old.
Myth #5: Chapter 13 bankruptcy requires creditors to be paid in full.
Payment plans established under a Chapter 13 it ranges from full repayment to no payment at all. What you pay and to whom will depend on your disposable income.