Myths about BankruptcyBankruptcy Myths

Deciding whether bankruptcy is right for your situation is hard, but not having the facts makes it impossible! If you are facing financial difficulties, knowing the realities of bankruptcy can help you make decisions. There are a number of common myths many people believe about bankruptcy. At the Law Offices of Richard E Sexner, LLC we give you the facts about how bankruptcy can help you overcome a difficult financial situation. As the saying goes, the truth shall set you free.

MYTH: I must have a job to file bankruptcy.

You do not have to have any income to file a Chapter 7 Bankruptcy. In fact, it is usually easier to file if you have little to no income.

On the other hand, you must have some income to file a Chapter 13 Bankruptcy, although it does not have to be from a regular job. Social security, pension income, or rental income are all suitable forms of income for a Chapter 13 Bankruptcy.

MYTH: I cannot file for bankruptcy if I have a job.

Actually, the majority of people who file for bankruptcy do have a job, though some do not.

Your job status is only one of many factors that an expert would use to determine if bankruptcy is right for you. Such a determination can only be made on a case by case basis by a legal expert. The Law Offices of Richard E. Sexner, LLC offers free consultations to help you decide.

MYTH: I can never get credit again if I file for bankruptcy.

It is not uncommon for people to receive credit card offers immediately after they finish their bankruptcy. Since there are limits on when you can file another bankruptcy there are credit card companies that seek out people who have just filed to offer them credit. Similarly, there are auto lenders who deal with people who have received a discharge of existing debt in bankruptcy. Many of our clients have been approved for new credit - even while their bankruptcy was still pending.

In some cases bankruptcy can actually improve your credit score. One of the major factors in determining your credit score is your “income to debt ratio”. Your “income to debt ratio” compares how much money you owe to your creditors to how much money you earn in a year. If you owe more money than you make in a year, that is very bad. At the end of a Chapter 7 Bankruptcy you can be free from debt. This will give you an excellent “income to debt ratio”. As a result, your credit can be better after bankruptcy then it was before filing.

MYTH: I will lose my house and car.

The purpose of bankruptcy is to protect your home and possessions. Without bankruptcy protection, your creditors can try to take your possessions as part of state court collections proceedings. The bankruptcy court will stop the creditors from going after you and your possessions. If you are filing a Chapter 7 Bankruptcy there is a limit to the possessions that you can protect. There are different amounts of protection depending on the type of possession. The legal term for this sort of protection is an “exemption”. The “exemptions” available to you are different from state to state. The Law Offices of Richard E. Sexner, LLC will help determine how best to protect your assets. We have filed thousands of cases and we have never had a client lose any possession that we had not planned to surrender in the bankruptcy.

If you have a lot of equity in your real estate or if you have very valuable possessions then you may want to file a Chapter 13 Bankruptcy so they will not be vulnerable to seizure by your creditors. In a Chapter 13 Bankruptcy all of your assets can be protected from your creditors. Contact us so we can help determine which bankruptcy is best to help you protect your home, car and possessions.

MYTH: Once I have a judgment against me, I can’t get rid of it in bankruptcy.

A judgment will not stop us from getting rid of that debt in bankruptcy. Having a court render a judgment against you is all the more reason why a bankruptcy is the right course of action for you to take. Once you have a judgment against you, the creditor can try to garnish your wages, freeze your bank accounts and put a lien your real estate. Bankruptcy can stop this, but you will need to move quickly. Contact the Law Offices of Richard E. Sexner, LLC for a free consultation to get help quickly.

MYTH: Bankruptcy cannot help me with my taxes.

If you have income tax debt over three years old and the taxes were filed on time, you may be able to get rid of the debt in a Chapter 7 Bankruptcy. Even if we cannot get rid of the taxes in a Chapter 7 Bankruptcy, it is possible to force the IRS into a repayment plan under a Chapter 13 Bankruptcy. The rules regarding discharging taxes in bankruptcy are very complicated and require an experienced law firm like the Law Offices of Richard E. Sexner, LLC. Contact us now to find out how we can help.
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