You have probably heard some of the myths floating around about bankruptcy. You truly deserve to get accurate facts about how bankruptcy really works, what debts can be discharged, and the truth about rebuilding your credit. At our firm, The Fuller Law Firm, PC, we can answer your individual questions about bankruptcy, but we have outlined some of the common myths about bankruptcy to help you understand the process, and get the truth.
Myth: Your Credit Will Be Ruined Forever
The truth is that your credit is probably already seriously damaged if you are filing for bankruptcy. A bankruptcy remains on your credit report for up to 10 years. Any company looking a providing you with a loan can see that you filed in the past. The positive side of the story is that if you are careful about staying completely current with your bills going forward, you can rebuild your credit more quickly than you may think. The first credit offers you get will be for secured credit cards. You put the money down, and you can use your own money with the credit card. The company will charge you fees, so choose the best deal you can when you apply. Pay all your bills on time. Make sure no negatives go on your credit report. The other positive is that you no longer owe the bills that you formerly had – they are gone, which can improve your credit/debt ratio significantly. Your credit will not be ruined forever.
For those clients who are very concerned about building credit, for a small fee, we can run a special credit report that provides you with an estimated FICO score today, and also, an estimated FICO score 12 months after filing bankruptcy. Because bankruptcy wipes out your debts, in most cases, your FICO score is estimated to go up by 75 to 125 points within 12 months of filing bankruptcy!
In short, for most Debtors, bankruptcy will clean up and improve the credit score!
Myth: All Your Debt is Discharged
Not all debt is discharged when you file for bankruptcy. Certain debts incurred 90 days prior to filing might be denied a discharge, so never make charges on credit prior to filing. If you pay back certain family members within one year of filing, or if you pay back other creditors within 90 days of filing, and the repayment amount exceeds a certain amount, that person may be forced to give the money back to the court for other creditors. Student loans are usually not dischargeable, and taxes in many cases, are also not dischargeable. Back child support or spousal support also cannot be discharged. There are certain circumstances in which some of these could be discharged, but this should be discussed with our firm to determine if you qualify.
Myth: Those Who File for Bankruptcy are Irresponsible People
Most people who file for bankruptcy have run into serious financial problems, such as huge medical bills from an unexpected emergency, a divorce, or job loss. We find that most of our clients are hardworking, responsible people who have gotten into trouble. The federal government put bankruptcy laws in place to help debtors get a fresh start. Take advantage of it.
Myth: Filing for Bankruptcy is Humiliating
Perhaps one of the greatest myths about filing for bankruptcy is the assumption that everyone will find out that you have filed for bankruptcy. As of 2009, publications have stopped publishing announcements of anyone who has filed for bankruptcy. Unless you have cause for warning any creditors or have had reckless behavior in the past that the courts believe warrants necessary attention, your filing can remain quiet and private. The likelihood of anyone finding out that you filed for bankruptcy is minimal.
Additionally, many believe that filing for bankruptcy somehow reflects a personal failure. Due to social, economic, and religious stigmas, filing for bankruptcy has become synonymous with moral ineptitude. This is simply not true. We have seen thousands of cases come through our offices in San Jose, and most of the individuals filing for bankruptcy are hard-working, ethical individuals trying to do everything in their power to save their families. Struggling to pay bills due to a loved one's death, a divorce, a job loss, or a failed business venture could put people out of money for years and years. Bankruptcy could be the relief that these good, honest, and ethical workers need.
Myth: There is No Life After Bankruptcy
Yet another misconception about filing for bankruptcy is that it will ruin an individual's financial standing for the rest of their life. Yes, it is true that a bankruptcy will remain on your credit score for a period of 10 years. This is not to say that your credit score is shot or completely ruined.
You can rest assured that it will only be a short period of time before credit card companies and subprime lenders begin to offer you credit cards once again. Establishing good and trustworthy credit is absolutely possible after filing for divorce if an individual is careful and takes the appropriate steps toward creating a stable financial future. Your financial life does not have to end after bankruptcy, and we highly encourage individuals who have filed for bankruptcy to attend credit counseling classes to learn proactive behaviors to establish good standing with creditors and banks.
Making a fresh start includes changing your financial habits, and a bankruptcy attorney can assist you in managing your finances and accounts, and rebuilding for the future.
Myth: People Filing for Bankruptcy Can't Afford a Lawyer
Many people assume that because they can't afford their home mortgages, medical bills, car bills, and other daily expenses, they will never be able to afford the legal expenses involved in hiring an attorney to represent them in a bankruptcy case. Fortunately, during the process of liquidating your assets and property, a certain percentage is set aside to pay for things like legal fees, creditor fees, and court costs. Simply put, there is no cost difference to your pocketbook whether you enlist legal services or not.
At The Fuller Law Firm, PC, we believe in our clients. We know that our clients simply want relief from financial distress, and we believe that we can address their concerns with our proactive, problem-solving approach to bankruptcy.
The first steps to bankruptcy require you to act immediately. Call us today to schedule your free case evaluation. You can speak with our experienced legal team and support staff and determine which legal options are available to you. We happily open our office doors to residents of Oakland, Salinas, and San Jose, so call us now.