Common Bankruptcy Myths
Bankruptcy Attorney in Teaneck, New Jersey
You likely have heard more than one terrible myth about having to file for bankruptcy protection. Most people are terrified of filing for bankruptcy even when it would easily and smoothly save them from financial ruin. In reality, in most all cases, debtor(s) end up in a stronger financial condition after bankruptcy than if they just let their creditors remain unpaid. Irrational fears often hold people back from at least speaking with an experienced bankruptcy attorney. We hope that by dispelling some of these myths we can help you decide to schedule a consultation with an experienced bankruptcy practitioner to determine whether bankruptcy is the right course for you. Here are some examples of common myths about bankruptcy filings:
Myth I: Bankruptcy Is Difficult
While there are many rules that must be followed pursuant to the U.S. Bankruptcy Code and the process may seem extremely confusing for a debtor, as long as you have a competent lawyer who handles personal bankruptcies on a day to day basis, the process should be smooth and straightforward in most situations. At the Law Offices of Marc G. Alster, you will personally meet with Mr. Alster who has handled thousands of bankruptcy cases for almost 3 decades. After providing Mr. Alster with your necessary financial information and your current circumstances, Mr. Alster will be able to tell you if there are any potential pitfalls to your filing for bankruptcy protection which could cause your case to become contested or if you can expect a smooth and straightforward road to “getting a fresh start” as is the case with over 95% of Mr. Alster's personal bankruptcy clients.
Myth II: I Will Lose All or Some of My Property if I File for Bankruptcy
Nothing is further from the truth. 99% of individuals filing for bankruptcy do not lose any of their property. Not a single client of the Law Office of Marc G. Alster has ever involuntarily lost an asset directly to a creditor. In the vast majority of cases, clients/debtors assets are fully protected from seizure by a Trustee or any of the debtor’s creditors by the bankruptcy exemptions in the U.S. Bankruptcy Code. Mr. Alster will advise you how the Bankruptcy Exemption Laws would work in your case, at your free consultation.
Myth III: If I File for Bankruptcy, My Credit Will Be Hurt for 10 Years
Not true. It is true that a Chapter 7 bankruptcy filing is supposed to be reported on your credit report with the national credit reporting agencies, e.g. Equifax, TransUnion and Experian, for 10 years. However, this does not mean that you will have bad credit for 10 years. While your bankruptcy filing will be reported to the reporting agencies, your credit score will also reflect what happens and what you do after the filing of your bankruptcy case. Your credit score will reflect all post-bankruptcy car payments, mortgage payments, secured credit card payments and unsecured credit card payments, etc. If you make timely post-petition monthly payments to your creditors, you credit score will steadily get better thereby rebuilding your credit.
If you are considering filing for bankruptcy, it is likely that your credit is already in bad shape. Within 30 days after you receive The Bankruptcy Court's Discharge Order in a Chapter 7 case, which should be approximately 4 months after the petition is filed, creditors are legally obligated to report to the national credit bureaus that your prior debts, previously reported as late and/or unpaid in your Credit Report, have a $0.00 balance. Thus, for the vast majority of our clients, filing a bankruptcy petition becomes the first step in rebuilding their credit. If a debtor(s) has a steady job and paycheck, good credit can often be reestablished within approximately 2 years after filing for bankruptcy protection. Read more about rebuilding your credit.
A Chapter 13 bankruptcy petition remains on file with the 3 national credit bureaus for 7 years as opposed to the 10 years a Chapter 7 filing is reported .If you file Chapter 13 bankruptcy, you most likely have a mortgage payment(s) or car payment(s) that you will resume making pursuant to your Chapter 13 Plan. If you are able to make these post-petition payments in a timely manner, as Chapter 13 Debtors obligated too, your credit scores will increase even if you don’t make any other payments to secured and/or unsecured credit card lenders or other creditors while your bankruptcy case remains open. Read more about rebuilding your credit.
Myth IV: Only A Deadbeat Would File Bankruptcy
Thousands of responsible people have to file for bankruptcy protection each year. The overwhelming majority of people who what the how file for bankruptcy protection are hardworking Americans just like you and me. Something has happened in their lives, i.e., losing a job, getting a divorce, or medical bills incurred from an illness or accident, which has caused them to have to file for bankruptcy protection. Many top businessmen and respected individuals have a bankruptcy filing in their past, and it is not correct to consider anyone a deadbeat when they take advantage of the opportunity given to them by the U.S. Federal Government for well over a hundred years to get a "fresh financial start." In fact, in 2010 approximately 1.5 million Americans filed for Bankruptcy protection; this is very close to the number of Americans who graduated with a 4 year Bachelor's degree from U.S. colleges and universities in 2010.
Myth V: If You Are Married, Both Spouses Must File Bankruptcy
This is not true. One spouse can file bankruptcy and the other spouse's credit rating would not be affected and he or she would not otherwise be involved in the bankruptcy at all. The non-filing spouse often benefits from the Bankruptcy filing of their spouse, as creditors are no longer able to call the debtor(s) home. In many cases, a filing by only one spouse makes sense if a large portion of the debt owed is under the name of only one spouse, and the other spouse has a good credit score with the three national credit reporting agencies, Equifax, Experian and TransUnion. This can occur in a marriage when one person entering the marriage comes in with huge debts. For more information on this see the article in this website entitled Bankruptcy and Spouses.
Myth VI: It Is Okay to Run up Your Credit Cards Prior to Filing Bankruptcy
Don't try this - it is not true. If you recently put a lot of charges on your credit cards just prior to filing bankruptcy, especially for non-necessities, creditors may file an adversarial complaint with The Bankruptcy Court seeking an order from the Court not allowing the subject debt(s) incurred in bad faith to be discharged with the debtor(s) other debts. If this happens, debtor(s) would remain liable for these debts incurred in bad faith. More importantly, once the Court appointed Trustee smells bad faith by the debtor(s), the whole bankruptcy case could be subject to dismissal without a discharge by either the U.S. Trustee's Office or the Chapter 7 or 13 Trustee appointed by the Bankruptcy Court to oversee the debtor(s) case.
Myth VII: If I File, I Will Lose My Job or Not Get a New Job
In almost all cases, employers will not find out about an employee's bankruptcy case unless the employee chooses to tell them. Either way, most employers are not allowed to fire, or take any other adverse action against an employee who files for bankruptcy protection.
Myth VIII: Bankruptcy Will Not Help Me Because I Owe Taxes
While it is true that some taxes cannot be discharged, others can be. There are many rules to discharging taxes that Mr. Alster will explain to you during your free consultation.
Myth IX: Everyone Will Know that You Have Filed for Bankruptcy
Unless you are a prominent person or a major corporation and the media picks up on the filing, the chances are very good that the only people who will know about your filing are your creditors and anyone you decide to tell. While it is true that a bankruptcy filing is a matter of public record, the number of filings is so massive that, unless someone is specifically trying to track down bankruptcy specific information on you, there is very little likelihood that anyone will know that you have filed. As for newspapers, our experience is that because of the large number of filings, there are few publications that have the space, the manpower or the interest in running the names of debtors filing for bankruptcy protection. Think about it, even if they did who would be interested enough to read that stuff.
Myth X: You Can only File Once for Bankruptcy Protection
Not true. The truth is that you can only file for and receive a Chapter 7 discharge once every eight (8) years After 8 years, if need be, you can file for and receive a Chapter 7 Discharge again. As for filing a Chapter 13 case, you would have to wait four (4) years after receiving a Chapter 7 discharge to file a Chapter 13 case, and receive another Chapter 13 Discharge. Likewise, if you received a Chapter 13 discharge you would have to wait four (4) years before filing and being eligible to receive a discharge in a Chapter 7 case. You would only have to wait 2 years from receiving a Chapter 13 Discharge before becoming eligible to file and receive another Chapter 13 discharge. Hopefully, you will not need to receive more than one Bankruptcy discharge, but many people file more than one bankruptcy case in their lifetimes.
Looking for an attorney for a bankruptcy case in Hackensack, NJ? You do not have to let the uncertainty of bankruptcy myths prevent you from taking a step toward a brighter financial future. Please call today to schedule an appointment for a detailed, comprehensive and personal consultation with Mr. Alster.
From his office in Hackensack, New Jersey, Attorney Alster's services extend throughout the state of New Jersey, as well as New York. Some areas he serves in New Jersey are Passaic County, Bergen County, Hudson County, Essex County, and more; in New York, he serves Rockland County, Queens, and the Bronx.