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Each and every one of these statements is false:
- Bankruptcy relief is no longer available.
- You can’t file bankruptcy if you have a job.
- Medical bills can’t be discharged in bankruptcy.
- Chapter 13 plans require repayment of debt in full.
- People who file bankruptcy can’t get credit for 10 years.
- You lose everything you own in bankruptcy.
- Bankruptcy is a sign of personal or moral failure.
- Bankruptcy costs our society too much.
- A minimum amount of debt required to file bankruptcy.
- Married couples must file together.
Myth: Bankruptcy Relief Is No Longer Available
Almost all of the relief formerly available through bankruptcy survives in today’s Bankruptcy Code. It is a little more involved and somewhat more expensive, but it still works.
Myth: You Can’t File Bankruptcy If You Have A Job
The new means test is supposed to divert some filers who make more than the median income for households of their size in their state of residence to Chapter 13. The only way to fund a Chapter 13 plan is to HAVE a job. So, this is utterly untrue. Read more about the means test.
Myth: Medical Bills Can’t Be Discharged In Bankruptcy
A variation on this myth is that “you can’t discharge credit card debt in bankruptcy.” This has the sound of the law as described by bill collectors. Almost all unsecured contract debt, like credit cards, personal loans and medical bills, remains dischargeable in bankruptcy. More on the discharge.
Myth: Chapter 13 Plans Require Repayment Of Debt In Full
Chapter 13 plans range from plans that pay general unsecured creditors nothing to plans that pay 100 percent, with every variation calculable in between. How much you pay in Chapter 13 is driven by the interplay between your disposable income, the value of your nonexempt assets and the total of priority debts you have.
Myth: People Who File Bankruptcy Can’t Get Credit For 10 Years
Nonsense. People in Chapter 13 can borrow money during the case (with court approval). People who’ve filed Chapter 7 get inundated with credit card offers after they get their discharge. This is not credit at the best rates, but credit is available. The myth probably got its start in the fact that the Fair Credit Reporting Act allows the reporting of a bankruptcy filing for 10 years.
Myth: You Lose Everything You Own In Bankruptcy
Well over 95 percent of the bankruptcy cases filed by individuals are “no asset” cases in which debtors keep everything they own. That’s because exemptions provide for assets that the debtor can keep and some assets, like pensions, are beyond the reach of bankruptcy trustees and creditors.
Myth: Bankruptcy Represents Personal Or Moral Failure
More than 90 percent of bankruptcy filings are traceable to job loss, illness or divorce, factors largely out of anyone’s control. Bankruptcy is a safety valve to prevent individuals from being buried by debts they can never repay.
Myth: Bankruptcy Costs Our Society Too Much
Credit card issuers are wildly profitable despite the small percentage of loans discharged in bankruptcy. Our economy has benefited by the purchasing power facilitated by credit and the pricing of credit into accounts that not everyone will be able to repay.
Myth: A Minimum Amount Of Debt Is Required To File Bankruptcy
Bankruptcy law does not set any minimum amount of debt necessary to file. If the debt appears to be beyond your ability to pay, you can elect to file bankruptcy if it represents a smart choice in your personal and financial situation.
Myth: Married Couples Must File Together
Spouses may file a joint case, but they do not have to file together. If only one spouse files, careful attention is required to understand what property will be treated as property of the bankruptcy estate.
A bankruptcy attorney can evaluate your financial situation and discuss your options with you, in and out of bankruptcy.
We encourage you to call 515-274-9161 or use our online contact form to schedule a free one-hour consultation with a lawyer who emphasizes clear communication and cost-efficient solutions. We will review your situation and recommend an effective course of action.
We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.
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