It takes a bankruptcy expert to explain what is true about personal bankruptcy and what is bankruptcy myth. The public has extraordinary misconceptions on the subject of personal bankruptcy. Even the chattering money experts on TV talk shows know next to nothing about it.
Have you ever said, “I can’t pay my bills?” If you have, this article is for you.
Most people who mention bankruptcy are referring to Chapter 7 bankruptcy. So that is what we are talking about here. There are lots of bankruptcy myths. As a bankruptcy expert, I have met lots of people who think they will be sent to jail. Others think that after bankruptcy you still have to pay back what you owed. Much of the nonsense is spread by debt collectors. Debt collectors don’t want you to consider filing personal bankruptcy. So they try to scare you. But the biggest myth about personal bankruptcy is that you will wreck your credit. Why is that a myth? It’s a myth because you can’t wreck something that already is wrecked. Folks who file bankruptcy basically fall into two groups. Most are already way behind on everything, with bill collectors driving them crazy. However, there are also a few filers who might still be current on their debts – but they are also over their eyeballs in debt. Both groups have already wrecked their credit. You might still have a great credit score. But don’t let that fool you. Your credit is already wrecked. When you are over your head in debt, nobody is going to grant you any further credit. When nobody is willing to loan you more money, it’s because you haven’t got any credit left to your name.
You sign a bunch of legal papers, and then POOF! Your debts are gone. It’s like magic. At least it seems that way to a great many people. And that too, is part of the bankruptcy myth. But there is a lot of activity that takes place behind the scenes. Stuff most folks never see. Let me tell you about it. Afterwards, you will understand that it all comes from the rule of law in a civilized society.
Bankruptcy the Reality
Here’s what happens in a typical bankruptcy case. The filing takes place in the United States Bankruptcy Court. The filing of a bankruptcy case creates an “estate,” comprised of everything you own. Simultaneously, the law creates an “automatic stay.” The stay protects all of your assets, and it makes your creditors stop what they were trying to do to you. The law lets you keep a lot of your stuff. So much so, that almost all cases go through the bankruptcy process without anybody giving anything up. Sometimes you hear complainers say they filed bankruptcy and lost everything. If you dig down a little, you find out they “lost” the stuff that was going to get repossessed anyway. As an example, if you buy a house or a car that you can’t afford, it’s going to get repossessed. You don’t need Einstein to tell you that. The bankruptcy law will release you from most kinds of debts. It won’t release you from family support, but it will release you from income taxes if you can meet a few simple criteria. Also, student loans usually do not get wiped out. Most folks who are broke are eligible to file personal bankruptcy. The court will need some assurance that your debts were made under honest circumstances. Also, the court needs to be certain that you can’t afford to pay those debts now, and for the foreseeable future. Most people will attend just one very brief hearing.
The way you make all of that happen begins with a set of bankruptcy papers. The paperwork is kind of like a very complicated set of tax papers. It is easy for you to make mistakes if you are trying to handle your own case. Simple mistakes might mean you will have to file corrected papers and appear at extra hearings. Bigger mistakes might mean that you will lose money you might have been able to keep. Really big mistakes might mean that your bankruptcy case will not be granted. If so, you will still owe all your debts.
The best way to get your case done right is to be represented by a bankruptcy expert. A bankruptcy expert will be a lawyer with many years of successful experience. At my law firm, we provide everyone with a free consultation. We try to make each client feel like they are talking to a trusted family friend. We will not recommend bankruptcy unless you need it. We keep our fees low. And we take take your hardships into account when offering you a fee.
You can do more reading about personal bankruptcy here, in our free online guide.
If you would like to talk to a bankruptcy expert right now, for free, you can.
Give us a call. It will be like talking to an old friend.