Having practiced bankruptcy law, and nothing but bankruptcy law, in our NW Georgia community for almost 20 years, I’ve noticed that a large percentage of clients have assumed that certain “bankruptcy myths” are true. However, I am relieved to tell you that the following Common Myths about Bankruptcy are absolutely false!
I will lose everything I own
Polk County residents, along with residents of any County in the State of Georgia, get to use the revised Georgia state exemptions. Georgia law allows you to maintain a basic standard of living. As a result, you get to keep property to help you get a fresh start. It is very rare for you to lose any real or personal property.
Bankruptcy won’t eliminate a 2nd mortgage
For the most part, all unsecured debt is discharged in the bankruptcy. However, certain types of debt survive the bankruptcy or are very difficult to have discharged. They include student loans, criminal restitution or fines, child support and alimony, and debts incurred as a result of fraud. But did you know that, with the decline in real estate values, this is the PERFECT opportunity to ELIMINATE YOUR 2nd MORTGAGE? When you come in for your free consultation, we will explain how easy it is to get rid of your 2nd mortgage.
I can’t “pick-and-choose” which debts to keep, and which to eliminate
False! Bankruptcy is designed to help you keep the things you need, like a house or a car, while eliminating the baggage, like credit cards and medical bills. You can keep the good debts, and get rid of the baggage.
A bankruptcy ruins my credit for 10 years
A bankruptcy may show up on your credit seven to ten years. However, because a bankruptcy discharge tends to eliminate all of your unsecured debt, you’ll have a clean-slate, or a platform to rebuild your credit. In fact, most of our clients are able to obtain car loans immediately after the bankruptcy, provided they are willing to pay a slightly higher interest rate. Furthermore, FHA guidelines provide that you may qualify for a new mortgage loan, at conventional interest rates, with 18 to 24 months after the bankruptcy. Therefore, just because the bankruptcy appears on your credit, this does not mean you can’t rebuild your score quickly, and finance the things you need.
I can’t file bankruptcy more than once
Not true. If you receive a discharge in a chapter 7, you must wait eight years from the date you filed the bankruptcy to file another chapter 7. In the event that you need to file another bankruptcy sooner, you may file a chapter 13 before that eight year period has expired. However, if it has been less the four years since the chapter 7 was filed, you will not be entitled to another discharge.
Both my spouse and I need to file
False! There are instances where only one spouse needs to file for bankruptcy, especially if just one spouse is on the majority of the debt.
Back taxes always survive the bankruptcy
False! Contrary to popular belief, it IS possible to discharge (eliminate) income taxes that are more than three years old, but to do so, certain conditions must be met. We can also eliminate tax liens!
If you’d like a FREE and CONFIDENTIAL consultation from an experienced lawyer about your rights under the law to re-structure or eliminate debt, please give me a call or send me an e-mail.
Brian R. Cahn