Bankruptcy: Myth or Truth?

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Bankruptcy: Myth or Truth?

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#1 Myth: There is no longer bankruptcy relief available.

Almost all of the bankruptcy relief that was available before the law changed in 2005 is still preserved in the current bankruptcy statute. It is a little more complicated and pricey than it was before the “reform,” but it still functions.

#2 Myth: If you are employed, you cannot declare bankruptcy.

The new “means test” is intended to prevent some filers from filing under Chapter 13 if their income is higher than the median income for households of their size in their state of residence. You must HAVE a job in order to finance a Chapter 13 plan. This makes it completely false.

#3 Myth: It’s impossible to discharge medical debt

This misconception is also sometimes referred to as “you can’t discharge credit card debt in bankruptcy.” This sounds like the law as bill collectors tell it. Credit card debt, personal loans, and other types of unsecured contract debt are almost always still dischargeable in bankruptcy.

#4 Myth: Chapter 13 plans call for full payback

Plans under Chapter 13 might range from paying general unsecured creditors nothing to paying them 100%, with every possible variation in between. The interplay between your disposable income, the value of your non-exempt assets, and the total amount of priority debts you have determines how much you must pay in 13 payments.

#5 Myth: Bankruptcies prevent you from obtaining credit for ten years.

People who have filed for Chapter 7 bankruptcy receive credit card offers immediately after receiving their discharge; people in Chapter 13 bankruptcy can borrow money during the procedure. Although the rates on this credit are not the finest, credit is still possible. The Fair Credit Publication Act permits the reporting of a bankruptcy filing for a period of ten years, which is likely where the myth’s origins lie. After bankruptcy, credit

#6 Myth: If you file for bankruptcy, you lose everything.

Most personal bankruptcy petitions filed by people are “no asset” cases, in which the debtor retains ownership of all of his assets. This is so that assets that the debtor may keep are protected by exemptions. Pensions, for example, are among assets that bankruptcy trustees just cannot access.

 

#7 Myth: Personal failure is represented by bankruptcy

More than 90% of bankruptcy filings can be linked to situations that are largely beyond anyone’s control, such as job loss, sickness, or divorce. In order to avoid people from being buried with debt they would never be able to repay, bankruptcy is a safety measure. View the typical filer’s profile.

#8 Myth: Bankruptcies are too expensive for our society.

Despite the low number of loans dismissed in bankruptcy, credit card companies make enormous profits. The increased purchasing power enabled by credit has been beneficial to our economy. Credit is priced with the understanding that not everyone would be able to pay it back.

#9 Myth: A certain level of debt is necessary.

The minimum amount of debt required to file for bankruptcy is not specified by law. You can choose to file for bankruptcy if it makes sense given your financial and personal circumstances if the debt seems to be beyond your capacity to pay.

#10 Myth: Married couple filing jointly

While it is not required, spouses may file a joint case. When only one spouse files for bankruptcy, it is important to pay close attention to what assets will be considered assets of the bankruptcy estate. more about bankruptcy & spouses.

Your financial status can be assessed, and you can discuss your options—both inside and outside of bankruptcy—by speaking with an expert bankruptcy attorney. To book an appointment , log on to – https://www.recoverylawgroup.com/bankruptcy/.


    2022-09-12T05:58:20+00:00