When we need advice about personal problems, we often find ourselves listening to trusted friends, relatives, neighbors and co-workers who are very well-intentioned, but limited in the knowledge they can pass on to us. For instance, when we have a health issue a close friend might say “Try THIS medicine because it worked for me…”; while your neighbor might tell you “Oh no, you need to switch your diet and eliminate THESE foods…”; and an older relative might instead tell you “Well, what we used to do back in the day was THIS….”. All that may seem like good advice, but how do you pick through it?
Sometimes, the best course of action is to seek out and listen to a professional, a person who has devoted their career to solving problems just like the ones you are facing!! For health issues, that might be a doctor or nurse. For financial problems, however, people often turn to a bankruptcy professional to discuss their options and help them pick through the flood of rumors, advice and stories they have heard. Today, we will attempt to sort through some of the most common myths and misconceptions about bankruptcy.
Question: “In a bankruptcy, will I get to keep all of my things?” Answer: YES!! Most of our clients keep their home, vehicles, jewelry, clothing, and furniture. Usually, they only let go of what they WANT to walk away from (like a vehicle that they are paying for but no longer runs).
Question: “Can I keep my retirement accounts”? Answer: YES!! In fact, most retirement accounts are not even a part of your bankruptcy case at all!! Federal law says that Pensions, 401(k) and IRA accounts are usually TOTALLY PROTECTED in a person’s bankruptcy case!!
Question: “I have delayed doing a bankruptcy for a while…and now creditors have sued me or gotten a garnishment on me…can bankruptcy still help me stop all this?” Answer: YES!!! ABSOLUTELY!! In fact, stopping all collection activity against you is one of the things a bankruptcy does best! Time is important though, because some things cannot be undone (like a foreclosure sale on your home…which CAN be stopped before it ever occurs!).
Question: “Will my bankruptcy be a private matter?” Answer: YES!! Although bankruptcy is a Federal Court proceeding, our clients report that they usually go through the entire process without ANYONE knowing they did it…not their close friends, not their co-workers, not their neighbors, and not their relatives.
Question: “Will I be able to buy a house or car after my bankruptcy?” Answer: YES!! Absolutely!! In fact, many of our clients report getting offers of credit in the mail during their bankruptcy cases!! Of course, such things are affected by issues like whether you have income coming in, but many creditors understand that in the years after a bankruptcy case you are in a BETTER position to buy a house or car because you have dealt with and wiped away many of your old creditors.
Question: “Will my credit score go back up again after a bankruptcy?” Answer: Almost always YES. In fact, many of our clients report that when they check their credit score a year AFTER the bankruptcy, the score it often HIGHER than it was before the bankruptcy case was filed!! How can this be? Simple…because you have dealt with all of the “old stuff”, and they are no longer being reported as a negative on your credit report. Instead, that “old stuff” becomes less and less important as time goes by, while the focus is now on your “new stuff” and what you have done AFTER the bankruptcy case.
Question: “Can I file for bankruptcy more than once?” Answer: YES!! People’s situations and problems change over time, and sometimes you solved a set of problems several years ago, but now an entirely NEW set of problems have arisen…and the bankruptcy system is there to provide a safety net for you ALL THE TIME, not just once. Life happens, and when problems pop up they need to be fixed!!
Question: “Can I file a bankruptcy by myself, or would my spouse have to file also?” Answer: Many, many times we see JUST one person filing a bankruptcy case, because their spouse either does not need to file OR chooses not to file. That is fine, and it is their right to make their own decision…but it is YOUR right to make YOUR own decision as well!!
Question: “Do I have too much (or too little) debt to file a bankruptcy case?” Answer: NO!! There is no such thing as “too much or too little debt”. Every person’s situation is different, and the solutions will vary from person to person, depending on those unique situations (as they should, right?).
Question: “Will a bankruptcy affect my job, student loan applications or Section 8 housing?” Answer: NO!! In fact, Federal law specifically says that you CANNOT be discriminated against in any of these areas simply because you chose to get help through the bankruptcy process.
Question: “Is there a limit to what I can include in my bankruptcy?” Answer: Almost always NO. We fix and deal with all sorts of problems…including property taxes, student loans, income taxes, old utility bills/shutoffs, co-signed debts and many others. Some of these debts are washed away entirely, while others might need new payment arrangements for during or after the bankruptcy case (depending on the type of debt it is and type of bankruptcy you choose to do). Still, while you are inside the bankruptcy, you are protected from ALL collection activity of these creditors!
Question: “When will the bankruptcy go off my credit report”? Answer: Bad credit (like a non-pay or slow payment on a bill) stays on your credit report for 7 years…while a bankruptcy, which fixes all of this, only stays on your credit report for 10 years!! From there, it is supposed to be removed by the credit reporting service.
Remember, sometimes bad things happen to good people. It is important to get good advice from a trusted source. Our office has successfully completed almost 20,000 bankruptcy cases over the years!! The law is there to protect you… and so are we!!
James Frego is the owner and managing member of Frego & Associates—The Bankruptcy Law Office, which is Michigan’s largest consumer bankruptcy law firm. It has offices in Warren, Dearborn Heights, Flint and Ann Arbor, with its practice focused primarily on helping people get the protection they need from creditors, especially through the filing of bankruptcy. To schedule a no-obligation visit with an attorney at any of our offices, please call (800) 978-4788 or visit FregoLaw.com for more information. The law is there to help you… and so are we!
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