For many people the word bankruptcy implies financial hardship, they don’t know the details, they just know it’s ‘bad’. Bankruptcy information isn’t taught in schools and most people know only small bits of information about it, sometimes completely incorrect bits at that! Understanding the bankruptcy process is important because, despite popular belief, bankruptcy does not mean that you’re financially doomed or red-flagged for life. The following are seven of the most popular bankruptcy myths debunked:
1. You will lose everything you have – This is the biggest myth of bankruptcy. Some people really believe that all of their worldly possessions will be ripped out from under them and they will have to start back at zero. Each state varies on laws, but every state has exemptions to protect certain assets; such as your house, your car (to a certain value), money in qualified retirement plans, household goods and clothing.
2. You can only file for bankruptcy once – Bankruptcy code allows for a debtor to file more than once. A new law states that you can only file for Chapter 7 discharge once every eight years. A debtor can file a Chapter 13 bankruptcy much sooner if necessary, but depending on the case and time passed, may not receive a Discharge Order in the case.
3. I can lose my job if I file for bankruptcy – Bankruptcy code strictly prohibits termination due to bankruptcy. The law states “No private employer may terminate the employment of, or discriminate with respect to employment against, an individual who is or has been a debtor under this title, a debtor or bankrupt under the Bankruptcy Act.” Furthermore, the code protects debtors from employer discrimination during the hiring process if they have already undergone the bankruptcy process.
4. Everyone will know I filed for bankruptcy – While bankruptcy is a public legal proceeding, unless you are a celebrity or public figure the media will very rarely run a bankruptcy story.
5. If you’re married, you must file jointly for bankruptcy – If one spouse must file for bankruptcy, they can do so solely. This works well if much of the debt is in one spouses’ name, however, if the intent is to discharge joint accounts, the two should file jointly.
6. I will never be given credit again – Another big myth with bankruptcy is that you’ll be black balled by every creditor in town, which is simply untrue. The truth is that you will have different kinds of creditors now interested in your business. Many will have higher interest rates and you will need to prove your ability to pay before making larger purchases.
7. Bankruptcy is a difficult process – Bankruptcy is not as complicated as people may think. Many people get their bankruptcy information from following celebrity cases, where numbers are in the millions and there are multiple businesses, accounts and hidden assets to account for. Standard bankruptcy cases are much simpler and a good El Paso bankruptcy attorney will be with you through every step of the process.
Jeff Davis is the Owner of the Davis law firm and a highly experienced El Paso bankruptcy attorney. To find out more information about a El Paso bankruptcy lawyer, please visit www.jeffdavislawfirm.com.