- “Bankruptcy will ruin my credit and I will not be able to buy a house or car for 10 years”.
- “I will lose all my stuff if I file for Bankruptcy”
- “Since I am married my spouse has to file with me and they won’t do it. What do I do”.
- “I have already filed Bankruptcy once. I can’t do it again”
- “I heard or read on the internet that most people are not eligible for Bankruptcy anymore because of the Means Test”.
I love my law firm of Bond and Botes, my law partners, my law associates, my employees and the practice of Consumer Bankruptcy very much. It is a great thing to love what you do and who you do it with and I am so blessed to get to do just that every day. I also love my clients and solving the financial problems they bring to our offices at Bond and Botes each day. It is so refreshing to have a client leave our office with a smile when unfortunately, they arrived in desperation and tears. Oftentimes we are getting to joke with each other as they leave the office, which is such a contrast to their demeanor when we first met. However, the things that I don’t like is the false impressions that mortgage companies, credit card companies, payday lenders and the like tell my clients before they arrive at my office. These lies are the reason that the client doesn’t make it to my office until several months after they should have already met with me. I don’t want to say that they wait until it is too late because it is never too late. That is a myth itself. So this blog is to bust those myths that I most commonly hear from my initial office conferences with the clients I love.
Some of the most common myths I hear are as follows:
“Bankruptcy will ruin my credit and I will not be able to buy a house or car for 10 years”.
This is probably the most famous and definitely the most terrible myth. It delays many hard working Americans from getting a fresh start for months. Bankruptcy will not prevent your credit score from going up and in actuality is allows it to go up, a lot of times immediately. The things (foreclosure, late payments, repossession, lawsuit, etc) that were pulling your credit down (or making it look like a heart monitor) are the things that the Bankruptcy discharge eliminates. I have clients immediately after their Chapter 7 discharge obtain a car loan. I have Chapter 13 clients get car loans during their Bankruptcy case. Speaking of Chapter 13 Bankruptcy, it even falls off your credit report in 7 years, forget 10. Thus, Bankruptcy will not prevent you from getting a car or home loan. I have clients that buy a home within two years after their Chapter 7 Bankruptcy and Chapter 13 clients that buy a home during their Bankruptcy Case. I advise throwing them away, but my clients receive personal loan and credit card offers immediately after their discharge. So, our clients are often amazed at how quickly they are able to get credit and how soon their credit score recovers.
“I will lose all my stuff if I file for Bankruptcy”
My clients rarely lose their home, land, vehicles or other secured property. In actuality, most of my clients keep all the stuff that they want to keep. The only things they lose are all the credit card debt, personal loans, lawsuits, foreclosure deficiency, repossession deficiency, payday loans, medical bills, co-signed debts, etc.
“Since I am married my spouse has to file with me and they won’t do it. What do I do”.
This one scares a lot of people, but is entirely false. A married person can file Bankruptcy by themselves and leave their spouse off the petition. The law allows anyone to file Bankruptcy, either individually or jointly. The Court will want to know the income from the non-filing spouse if he or she is employed or receives income of any sort, but they do not have to file, nor will the Bankruptcy have anything to with them. The non-filing spouse’s assets do not have to be listed as long as they are solely owned by the non-filing spouse. It is true that a lot of the time, the debt is in both the husband and wife’s names, so they both need to file, but it is not required. If all of the debt is in one spouse’s name, there is no need for both the file and they both shouldn’t file.
“I have already filed Bankruptcy once. I can’t do it again”
This is false. The law does limit the time frame in which you can receive a discharge in a subsequent case, but not the number of times you can file in a lifetime. You can receive a discharge in a Chapter 7 once every eight (8) years. You can receive a discharge in a Chapter 13 theoretically every two (2) years. If your previous discharged case was a Chapter 7, you must wait four (4) years to receive a Chapter 13 discharge. If your previous case was a Chapter 13 discharge, you must wait six (6) years from the filing date of your 13 to receive a Chapter 7 Discharge unless the previous 13 paid unsecured creditor claims at a 70 percent clip. Now I did not say it wasn’t confusing, but you can file many times in a lifetime if needed and filed in good faith.
“I heard or read on the internet that most people are not eligible for Bankruptcy anymore because of the Means Test”.
This is 100% false and creditors love to spread this one. On October 17, 2005, Congress signed into law new Bankruptcy legislation that required you to fill a form out called the Means Test. The Means Test only decides which Chapter of Bankruptcy you are qualified to file, but not whether you can file or not. Anyone can file Bankruptcy. You might have to file a Chapter 13 instead of a Chapter 7, but you can still file Bankruptcy.
There are many more myths and I know I will keep debunking them for years to come, but the moral of this blog is that if you aren’t happy with your finances or if you realize that your bills are getting to be more than you can handle, please give us a call immediately. We can answer all your questions regarding Chapter 7 Bankruptcy, Chapter 13 Bankruptcy, stopping a foreclosure or wage garnishment, avoiding liens, stopping law suits, discharging medical debt, personal loans, payday loans credit card debt, etc. We can alleviate your stress! We want to help and we can help you!
We will analyze your situation and help you make the best decision possible.
Grant McNutt is a Managing Attorney at the Bond & Botes Law Offices in Florence and Haleyville, Alabama. He holds a Bachelor of Science from the University of Alabama, and a Juris Doctorate from the Birmingham School of Law. He has been practicing Consumer Bankruptcy Law since 1999.Read his full bio here.