When people visit our law offices, it becomes readily apparent that there are many misconceptions about bankruptcy. Before you leave our law offices, we seek to answer all your questions about a bankruptcy law, fully explore non-bankruptcy options, and clarify your misconceptions.
Here are some common mistaken beliefs:
1. It’s very difficult to file for bankruptcy
It is not difficult to file for bankruptcy. But it is recommended that you hire an experienced bankruptcy attorney to make sure that its done right, and that alternatives to bankruptcy are fully explored.
2. Only “deadbeats” file for bankruptcy
You can let go of this misconception about bankruptcy. Most people file for bankruptcy after a life-changing experience, such as a loss of a job, a serious illness, or a divorce. They’ve struggled to pay their bills for months and just keep falling further behind. Bankruptcy is a financial tool that at times, could make sense for almost anyone, including people and companies known for their wealth, or past business successes.
3. If you’re married, both spouses have to file for bankruptcy
This is not necessarily true. It often happens that one spouse has a significant amount of debt in his or her name only. However, if spouses have debts they want to discharge that they are both liable for, they should file for bankruptcy together. Otherwise, the creditor will simply demand payment for the entire amount from the spouse who did not file for bankruptcy.
4. I should not include certain creditors in my bankruptcy filing because it’s important to me to pay them back someday and if the debt is discharged (under a Chapter 7 liquidation), I can’t ever repay them
It’s a nice idea. After a successful bankruptcy, most of your debts will be discharge, and you are no longer obligated to repay them, but you would always have that opportunity. It is your choice. If your conscience bothers you because you didn’t pay your debts, there’s nothing in the Bankruptcy Code that prevents you from doing that once you get back on your feet. However, bankruptcy is an all-or-nothing deal, so you must include all your creditors in the bankruptcy petition.
5. You can’t get rid of back taxes through bankruptcy
Generally speaking, this is true. As the old saying goes, there are two things in life on which you can be fairly certain. . . but there is such a thing as tax bankruptcy. To have a chance of success, you have to file all your returns and the taxes owed need to be at least three years old. At Genova & Malin, Attorneys at Law, we have the experience to advise you on whether a tax bankruptcy is a viable option for you.
6. You can only file for bankruptcy once
This is not true. You can file for Chapter 7 bankruptcy once every 8 years. For a Chapter 13 court-approved debt repayment plan, you can file more often than that, but you cannot have more than one bankruptcy case going at one time. It’s probably not a great idea to make a habit of filing bankruptcy, however.
7. I can max out all my credit cards, file for bankruptcy, and never pay for the things I bought
If it sounds to good to be true, it probably is. Proceed in this fashion, and you could be charged with fraud. Fraud is definitely is not condoned by bankruptcy judges. The trustee in your case will review all your purchases right before your filing. Bankruptcy trustees know what to look for to find fraud. Put the credit card back in your wallet or purse.
You may have additional misconceptions about bankruptcy. After you leave our office, we should have those cleared up as well. Please do not hesitate to contact us now to arrange an appointment and see if filing for bankruptcy makes sense for you. Let us help you get your financial life back on track. We enjoy helping people and businesses get back on their feet.