Here at Sherman Law Firm, P.C., we encounter people who are afraid of filing for bankruptcy because of ideas or notions that are only based on hearsay or assumptions. If you have fears about the consequences or effect of bankruptcy on your life, it is better to have them confirmed or clarified with a reputable attorney first. Below are common myths that you might have encountered.
MYTH #1: I can only file for bankruptcy if I’m a destitute.
It is true that Chapter 7 bankruptcy requires a “means test” before being qualified. However, this doesn’t mean that you need to be impoverished or delinquent. Many people are still qualified for bankruptcy despite their salaries because of their needs or expenditures. It is important to remember that bankruptcy is not only for the under employed or unemployed. It is for those who need help managing their finances.
MYTH #2: You will lose everything.
Filing for bankruptcy doesn’t have to be as dramatic as the ones you see on television or movies. You don’t have to give up everything you own just to pay the debts. Some items are still exempt from being collected and used as payment. It is better to consult with your attorney so he/she can properly help you manage all your assets.
MYTH #3: Your credit will be ruined.
It is correct that bankruptcy can be kept on your record or credit rating for up to 10 years, but that doesn’t mean your reputation is ruined. In fact, the very fact that you are up to your neck in debt means that your credit score has already gone down. Bankruptcy can even help you mend your record.
MYTH #4: You can go to jail for your debts.
There is no jail for the honest debtor. If a debtor is commiting fraud or hiding assets, and the creditors contact the DA, there is the possibility they could go to jail. However, collectors or creditors can still sue you to collect the debt you owe them unless you file bankruptcy.
MYTH #5: You can only file for bankruptcy once.
You can file for bankruptcy again when your previous ones have been discharged. In Chapter 7, you can get another Chapter 7 discharge after eight years have passed from the date of filing of the prior bankruptcy case. Chapter 13 requires two years from discharge of the prior Chapter 13 in order to get another discharge.
Don’t rely on hearsay and get advice from a legal and financial expert. Give us a call here at Sherman Law Firm, P.C. to schedule a free appointment, and we would be happy to help you settle your affairs here in the Dallas, Fort Worth area. Thank you.