Blog | Legacy Legal Group, PLChttps://legacylawtc.com/blog/2024-03-29T09:53:36+00:00Our BlogBankruptcy Facts, Myths and Misconceptions2019-08-12T15:43:19+00:002024-03-29T09:53:36+00:00Sara Vynckehttps://legacylawtc.com/blog/author/scvyncke@legacylawtc.com/https://legacylawtc.com/blog/bankruptcy-facts-myths-and-misconceptions/<p style="text-align: justify;"><span class="smText">If you are struggling with debt, you may be thinking about filing bankruptcy. You may have heard several negative things about the bankruptcy process, some of which may be untrue. We can help you separate the myths from fact and clear up the misconceptions, so you can make an informed decision about your next step.</span></p>
<p><span class="smText xxxsmHdr">Debt Collectors Can Take Your House and Car</span></p>
<p style="text-align: justify;"><span class="smText">This is sometimes true, but not usually. Filing Chapter 7 is often a good option and 99% of the time you can keep the home and car and continue making your payments, or surrender and cancel the debt on these items. You will need to sign a reaffirmation agreement. This document is typically prepared by the lender.</span></p>
<p style="text-align: justify;"><span class="smText">Filing a Chapter 13 bankruptcy stops all foreclosure and repossession actions. During the bankruptcy process, debt is reorganized into a repayment plan, often allowing debtors to pay back past due mortgages or loan payments and keep their house and car by paying over time. However, some debtors may choose to surrender their house and car to relieve these debts and start anew. </span></p>
<p style="text-align: justify;"><span class="smText">If you're in danger of losing your house or car, call a bankruptcy attorney before the repossession is completed.</span></p>
<p style="text-align: justify;"><span class="smText xxxsmHdr">You Can Lose Your Job</span></p>
<p style="text-align: justify;"><span class="smText">The bankruptcy laws prohibit employers from discriminating against consumers by terminating employment for filing a Chapter 7 or Chapter 13 bankruptcy.</span></p>
<p style="text-align: justify;"><span class="smText xxxsmHdr">You Can Never Borrow Money Again</span></p>
<p style="text-align: justify;"><span class="smText">Although bankruptcy can lower your credit score and could stay on your public credit report for up to 10 years, many lenders will finance you at a higher interest rate shortly after filing bankruptcy. It is common to get home loans two or three years after filing. Your credit score may be better in the long run because much of the unpaid debt will be discharged and no longer calculated in your debt-to-income ratio. Filing bankruptcy may be the only way to improve credit in the long run!</span></p>
<p style="text-align: justify;"><span class="smText xxxsmHdr">You Can’t Have Retirement Savings</span></p>
<p style="text-align: justify;"><span class="smText">Although you are limited in the value of assets you can keep within bankruptcy, the amount of money you can protect in your retirement fund is generous. You do not need to cash-out your retirement savings to pay your creditors and it’s unwise to do so. If you are considering taking money out of your retirement to cover your debt, please contact our office before doing so we can advise you of your options. </span></p>
<p style="text-align: justify;"><span class="smText xxxsmHdr">You Can’t File Bankruptcy if You’re Employed</span></p>
<p style="text-align: justify;"><span class="smText">This is absolutely incorrect. A Chapter 13 bankruptcy is ideal for people who are employed or have a steady income but have simply fallen behind on payments. Further, as long as you fall below the gross income amount, you should have no issues being eligible to file a Chapter 7.</span></p>
<p style="text-align: justify;"><span class="smText xxxsmHdr">You Can’t File Bankruptcy on Credit Card Debt or Medical Bills</span></p>
<p style="text-align: justify;"><span class="smText">This is incorrect. The main reason a majority of people file bankruptcy is because of medical bill and credit cards. However, there are some debts that cannot be discharged in bankruptcy, including most taxes, student loans, support or divorce obligations, crimes or fraud.</span></p>
<p style="text-align: justify;"><span class="smText xxxsmHdr">Bankruptcy Can Be Denied</span></p>
<p><span class="smText">Less than 1% of cases filed using a competent attorney receive any kind of challenge to the right to file bankruptcy and these challenges are usually based on a high income or suspicious circumstances that involve concealment of assets or commitment of fraud or crimes. Even if a case is challenged, a well-prepared case may succeed and result in the debt relief that the client needs.</span></p>
<p><span class="smText xxsmHdr">Bankruptcy Is Your Fault</span></p>
<p style="text-align: justify;"><span class="smText">Bankruptcy is not usually the result of poor life choices or bad financial decisions. It is often due to circumstances beyond your control, such as loss of job, medical expenses, family breakups, separation, divorce, an illness, or the economy. You should not feel ashamed, but rather look forward to the opportunity to move forward. Learn the facts about bankruptcy by contacting us today.</span></p>What Debts can be Discharged in Bankruptcy?2015-04-08T18:25:00+00:002024-03-27T14:58:10+00:00adminhttps://legacylawtc.com/blog/author/admin/https://legacylawtc.com/blog/what-debts-can-be-discharged-in-bankruptcy/<p>Bankruptcy is an excellent tool to eliminate unsecured debt such as credit cards, medical debt, deficiencies resulting from foreclosure and repossession. These types of debts are discharged at the conclusion of the bankruptcy process in both Chapter 7 and Chapter 13 bankruptcy. In a Chapter 13 bankruptcy, you may be required to pay a portion of the unsecured debt through your repayment plan.</p>
<p>However, not all debts can be discharged in bankruptcy. Child support and spousal support arrears, recent tax debts, and student loans are non-dischargeable, meaning the debtor is still liable for these debts even after the completion of the bankruptcy process. Further, if you have debts that are secured by property, such as a home or vehicle, you will have to continue to make payments on these items in order to keep them.</p>
<p>It is always a good idea to evaluate all your options prior to filing bankruptcy. An experienced attorney can help you decide if filing bankruptcy is the right decision and what Chapter of bankruptcy may be right for you.</p>