Author: Michael Jaafar, Esq.
There are more myths about bankruptcy on the Internet and in the minds of Americans then there are truths. The worst source of information when considering bank our friends and family, and the Internet. Unless you are reading a technical website on the Internet or a book such as this written by a professional, in which case your information is coming from a better source.
Here are some of the most common myths and questions that I hear from Mike:
Bankruptcy prevents you from ever getting a job again: this one is categorically false. It has no basis in reality or fact. Ignore this one and don’t even think about it. It doesn’t even deserve an explanation. Millions of Americans file bankruptcy every year. Tens of millions of American adults are walking around today having formerly file bankruptcy. Some of them are very famous, and some are even running for president of the United States during the writing of this book.
As a matter of fact, one of our most famous and great president of all time, Harry S Truman, filed for bankruptcy. Specifically, chapter 7.
Bankruptcy makes you give up all of your assets: this is also absolutely false. The vast majority of people to file bankruptcy give up absolutely nothing beyond the money they pay their attorney, and their meeting of creditors hearing lasts a few minutes with no one showing up.
The only place I can think that this myth originates from is the fact that Hollywood has sensationalized bankruptcy. As kids growing up, we watched a lot of movies. And in some of those movies, we saw images of moving people come to the home of the main character, and take their furniture after a financial calamity befalls them. I remember watching a movie with Steve Martin when I was a child. It was called “The Jerk,” and in one part of the movie, his character lost his business; and a moving company came to his mansion and took away all of his furniture and belongings, and left him with nothing.
These are the images we learn from Hollywood, but they are completely unfounded in truth.
If I file bankruptcy, I will never be able to get another loan: this is also completely false. As a matter of fact, you will be flooded with credit card offers the minute your bank if she is complete. And you can qualify for a home loan in as soon as 12 months after your case is filed.
The things that hurt your credit are the debts and delinquencies that lead you into bankruptcy in the first place—not the Bankruptcy itself. And if you file for Chapter 7 Bankruptcy successfully, you’re getting a “fresh start, and creditors recognize that you are more likely to repay any loans they give you after the bankruptcy than you were before you field bankruptcy. If they would have loaned you money before you file bankruptcy, then that that you owed them would essentially be thrown on top of the pile of the other debts that you had.
And if you file for a Chapter 13 Bankruptcy successfully, then you are reorganizing your debts and paying at least a portion of it back; and your credit report will reflect the on-time payments that you make during the Chapter 13 case.
Bankruptcy is shameful: this is absolutely false and is a very sad myth. The most common reasons for filing bankruptcy are
And no matter how strong or proud a person may be, or how good they are at paying their debts, very few people are able to sustain such tragedies like the ones above, and still keep up with their financial obligations current. Unless you come from a rich family or have rich parents to support you, you will likely need file bankruptcy when some of those things happen.
For example, if you are not wealthy enough to sue your insurance company when they deny coverage on a $30,000 medical bill when your child or spouse has to be admitted for an emergency surgery, then you will be saddled with that debt overnight.
And you will also have an impossible time keeping up with your rent and car payment if your employer notifies you that they are closing your division and relocating get to Mexico to find a cheaper labor.
In my many years representing people in bankruptcy, I seldom remember a bad person walking to my office. I don’t recall anyone ever coming in because they were trying to “game the system.” And that is why I love what I do.
So if Chapter 7 or Chapter 13 Bankruptcy can give you the relief you need, you shouldn’t hesitate to reach out to an attorney for a consultation.
This article is not meant as legal advice, and Bankruptcy is very complicated depending on every persons overall financial situation. So, if you are considering any chapter of the bankruptcy code, is it called one of our attorneys for a free, same day consultation.
To learn more about Chapter 7 or Chapter 13 Bankruptcy, the federal government has excellent information about it on their website at http://www.uscourts.gov/services-forms/bankruptcy
Fairmax Law™ is a Service of Jaafar Law Group PLLC and is a designated debt relief agency that helps clients file bankruptcy under the federal bankruptcy code.