Sometimes bankruptcy can be the best thing to provide a complete solution to solve your financial situation. It stops harassment from creditors, it stops the worry about ballooning debt, and it gives you a way to start fresh.
The Bankruptcy Code was created for a very good reason: To give people a break when they need it the most in order to provide people the incentive to continue to work, earn more money, pay income taxes, improve their lives and provide for their families. Otherwise, if someone is bogged down by creditor harassment, you don’t have much incentive to work.
If a creditor is taking all your money from your bank account, why would you continue to use a bank?
If a creditor is taking 25% of your gross income, how do you have money for food, housing and clothing?
The obvious question then becomes: “If bankruptcy provides financial relief for people, why do people “think” it is not a good solution?” The answer is that the “negative propaganda” is promoted by creditors who have a financial incentive to take your money, charge outrageous fees and charge you high default interest rates so that you can not get your debt paid or even catch up. Creditors do it for a purpose: For the Creditor to make money.
Here are five common bankruptcy myths and the actual reality that could change how you think about bankruptcy.
Myth #1: I will lose my stuff and my retirement. Reality: Most people keep everything. To start with your retirement plan is exempt to the extent necessary to support you and your family. There are laws governing what you can keep and what can be liquidated, but as long as you are making your home and car payments, you get to keep those and most other belongings. The money in your retirement plan is also protected. Most people actually pass through bankruptcy and keep all of their belongings.
Myth #2: My credit is ruined for life. Reality: Just the opposite is true. In many cases, after your file bankruptcy, your are in a better “credit worthy” position because of the timelines in place that prevent your from filing bankruptcy against any time soon. So, lenders are more willing to extend credit to you because the creditor knows that you cannot obtain bankruptcy relief again in the near future. You have to work hard to regain your credit rating, but repairing your credit only takes doing the same things it takes to maintain good credit. Pay bills on time, don’t keep balances on unsecured lines of credit, and check your credit report often.
Myth #3: Everyone will know I filed for bankruptcy. Reality: Unless you are a celebrity or major corporation, no one is likely to find out that you have filed bankruptcy. It is true that filings are public information, but the only people who are probably interested will be your creditors.
Myth #4: You can only file once in your life. Reality: There are a lot of different timelines that apply. The most common timelines are 8, 6 and 4 years. However, in unique situations, you can file a Chapter 13 or Chapter 11 bankruptcy in less than those time frames. The best thing to do is meet with a bankruptcy lawyer to find out what timelines apply for your situation.
Myth #5: It’s really hard to qualify for bankruptcy relief. Reality: Most people can qualify for one form of bankruptcy relief. There are different types of bankruptcies and the different types provide different forms of financial relief. What drives the analysis is a financial evaluation called “The Means Test.” The best thing to do is don’t jump to conclusions based on your own investigation on the internet. Meet with an actual qualified lawyer to completely go over your financial situation. There is more to the Means Test analysis than simply your gross income. There are a lot of other factors that come into play such as household size and quantum of secured debt.
Over the past 30 years, the Law Offices of Christopher A. Benson has helped over 2,300 of Washington clients take control of their financial situation. We can stop your garnishment and change your monthly payments for all your combined unsecured debt, and if you have had more than $600 garnished within the last 90 days, we can get all of the money back in most cases. But you have to act quickly–call (253) 815-6940 for your free consultation, or email us today. Evening and weekend appointments available.
About the Author
Chris served on the Board of Directors for Habitat for Humanity
Seattle/S. King County for 10 years and served as Vice President
of the organization during part of that time. Read More