There are two primary chapters of bankruptcy which individuals file; 7 & 13. Most people who file bankruptcy, file a Chapter 7. The goal in the Chapter 7 is to discharge your debts or relieve yourself of the obligation to pay those debts which are allowed to be discharged.
A lot of people, when considering bankruptcy, ask various questions about the process. Unfortunately the people they ask are often friends, family, co-workers, etc…
As a result, the answers they get to the questions which are posed are often wrong. So, I’m going to try to address some of the myths which surround bankruptcy.
- You’ll lose all of your property if you file bankruptcy. This is not true. Roughly 98% of the people who file a Chapter 7 bankruptcy can keep all of the property they own.
- If I own a house, I can’t file a Chapter 7. Again, not true. Most people who own a house have a mortgage on that property. Unfortunately, in this economy real estate has lost a significant amount of value so that there is little to no equity in most properties. Because of that, the vast majority of people who own a home can still file a Chapter 7 and keep their house if they choose. They’ll just have to continue making their mortgage payments.
- If I file bankruptcy, I’ll never be able to get credit again. This is also false. Different creditors have different policies with regard to how they lend money. The only thing which is certain is that the fact you filed bankruptcy will be on your credit report for 7 – 10 years. How creditors treat that information varies from lender to lender but as a general rule, most people can get another credit card six months from the date of their discharge. This is also the same for people looking to get a car loan.
Our office has even represented clients in the purchase of a home within 3 years of representing them in a bankruptcy.
Not all of these scenarios will apply to everyone but the point is that if you’re thinking about filing bankruptcy, contact an experienced attorney who will review your situation and provide you with accurate answers. We offer free initial consultations and would be happy to help you during a difficult time.