Bankruptcy Myths & Facts

Myth

When considering which lawyer to use for your bankruptcy case, the fee and not the experience should be your principal concern because after all, one lawyer is just as competent as another.

Fact

While it is true that any licensed attorney can prepare and file a bankruptcy case, not all lawyers are bankruptcy lawyers. I have been primarily engaged in bankruptcy law for over 35 years, in good times and bad. I am a former bankruptcy trustee and am able to look at your case with a discerning eye of a former trustee and spot any potential problems even before your case has been filed and work with you to correct them. In bankruptcy law, experience does matter.

 

Myth

Filing a bankruptcy case will involve multiple court appearances and a grueling cross-examination by my creditors.

Fact

Not at all. About 30 to 60 days after filing the bankruptcy petition, you will have to attend a 341 hearing, also known as the First Meeting of the Creditors. The bankruptcy trustee will preside over the hearing, and oversee your bankruptcy case, not a Judge. At the 341 hearing, the trustee will ask you questions under oath regarding the content of your bankruptcy papers, your assets, debts and other matters. Creditors will also be permitted to ask questions, although they rarely attend and are usually limited to just a few. Of course, I will appear with you at the hearing and insure that you are treated with respect and dignity. After the 341 hearing, you normally do not need to return to Court.

Myth

Employees or governmental agencies can discriminate against persons who file bankruptcy.

Fact

No, it is illegal for either private or governmental employers to discriminate against a person as to employment because that person has filed under Chapter 7. It is also illegal for local, state or federal governmental units to discriminate against a person as to the granting of licenses (including drivers license), permits, student loans and similar grants because that person has filed under Chapter 7.

Myth

You will never be able to obtain a Mortgage to purchase a home or get another car loan or lease if you file bankruptcy.

Fact

Not true. Most mortgage lenders will consider you for financing within 2 years after your bankruptcy case is closed, so long as you are otherwise qualified. Most auto lenders will grant you credit, but most likely at a higher interest rate.

There is absolutely nothing in the bankruptcy laws which prohibit you from obtaining new credit after your case is concluded, either secured or unsecured.

Myth

If you file bankruptcy you will lose all of the money you have in your 401(K), IRA, or employer provided pension plan.

Fact

Absolutely false. Both federal and state law protect 100% of all the funds in any pension plan, which is qualified and exempt from taxation under the Internal Revenue Code. It does not matter how much money you may have in your pension plan and whether or not you are vested.

Myth

A credit counselor or debt consolidation agency can reduce or eliminate your debts without the necessity of a bankruptcy.

Fact

Not always. Most credit counselors are really working for your creditors, not you. While they may be able to reduce your monthly payments or principal balance, they never can completely eliminate the debt and your creditors are under no obligation to work with them. Only bankruptcy can completely eliminate your unsecured debts and it does not require the consent or cooperation of creditors.

Myth

Why should I file for bankruptcy? I just lost my job, my house is in foreclosure and all I own are the clothes on my back, my car and a few dollars in the bank. After all, you cannot get blood from a stone.

Fact

If you do nothing, it will not get any better. You may not have a job now, but once you do, your creditors will be able to garnish your salary and seize and sell your car and levy on your bank accounts. By filing bankruptcy you can stop all this and may even be able to stop your mortgage arrears over a period as long as 5 years. It doesn’t cost anything to hear all your options from a bankruptcy lawyer with over 35 years of experience. Why not call today?

Myth

President Obama’s federal Bail Out proposals will reduce your debts and help you avoid foreclosure without having to file bankruptcy.

Fact

Nothing in the President’s Bail Out plan can help you pay your credit card debt and none of his proposals to assist homeowners in foreclosure has yet been past by Congress. Only the existing bankruptcy laws can help people with excessive credit card debt or homeowners in distress.

Myth

If I’m already in foreclosure or have been sued for collection, its too late to file for bankruptcy.

Fact

Absolutely false. Filing a bankruptcy case will stop all State foreclosure and collection cases. Chapter 13 may give you the opportunity to pay back your missed mortgage payments over as much as 60 months.

Only an experienced and knowledgeable bankruptcy lawyer can determine if this is possible in your situation.

Myth

If I file for bankruptcy, all of my neighbors, friends and family will find out.

Fact

Unless you are a celebrity or public figure that’s highly unlikely. While it is true that a bankruptcy is a public court proceeding, it is rare that anyone other than your creditors, their attorneys and the Court appointed Trustee will find out about it. There are no signs on your lawn, no one visits your home or workplace and there are so many filed that most newspapers don’t even take the time to publish them

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