If you have you heard that the new bankruptcy law means that there is no help for you or that you can no longer file for protection under the U. S. Bankruptcy Code, you have not heard the truth!! There are numerous false calms and misinformation that are being spread in our community about the bankruptcy laws. Here is why the Top 15 Myths about bankruptcy are NOT TRUE.
Under the NEW bankruptcy law, there’s no more bankruptcy and no more help (or it’s too late to file). NOT TRUE
It does not matter where you heard this, it’s just not true! The truth is that you can do just about everything when you file under the NEW law that you could do under the OLD law. In some ways, the new law actually increased the benefits of filing bankruptcy. As a result, many of our clients are getting better treatment under the NEW law than they could have gotten under the OLD law! Find out what filing for protection under the U.S. Bankruptcy Code can do for you by calling 1-248-546-2800 to set up your totally FREE initial consultation with one of our attorneys. At Gudeman & Associates, we know the law and we will help you use it to your best advantage.
Everyone will know you have filed for bankruptcy. NOT TRUE
Unless you’re famous or involved with a very high profile business, the chances are very good that the only people who will know about a filing are your creditors and the people you tell. While it’s true that bankruptcy is a matter of public record, the number of filings is so massive, that unless someone is specifically trying to track down information on you, there is almost no likelihood at all that anyone you know will know you filed. You have to make sure, however, that you don’t tell someone. Telling someone that you filed bankruptcy makes for good gossip, just like telling someone that you heard that someone is getting a divorce or that they have a drug or drinking problem or chronic illness. So, if you don’t want everyone you know to know you filed bankruptcy, you must keep it to yourself. As for our local newspapers, most papers don’t include information about who filed bankruptcy.
You will lose all your property. NOT TRUE
Most of our clients don’t lose anything! There are exemptions to protect such things as your house, your car, your truck, household goods and furnishings, IRAs, retirement plans, the cash value in life insurance and wages. There is even a “wildcard” exemption of $11,400 per person that can be applied wherever you want it. In those rarer situations where you have more property than can be protected by available exemptions, there is Chapter 13. In Chapter 13, you can even keep this property by paying a higher Chapter 13 plan payment. It is important that you understand that filing for protection under the U. S. Bankruptcy Code does not generally wipe out or get rid of mortgages or liens against your property. Therefore, if you want to keep your car, truck, home or business equipment that serves as collateral for a loan, you must keep paying on the debt. If you make these payments and have exemptions to cover any value above what is owed, if there is any, you will be able to keep these items.
You will never be able to own anything again. NOT TRUE
This is completely false. The bankruptcy laws are intended by Congress to provide you with a fresh start. That “fresh start” includes the ability to own real estate and vehicles and whatever types of property that you owned before filing. The truth is, however, that, in the future, you can buy, own, control and possess whatever you can afford. If you have or can come up with the money, there are no laws prohibiting you from buying homes, cars, trucks, equipment, household goods, etc., once you get what is called your ‘discharge in bankruptcy’.
You will never get credit again. NOT TRUE
The truth is that you are more likely to get credit after you file, than if you don’t file. Filing bankruptcy gets rid of your current debt. Getting rid of your debt allows you to handle new debt and new credit. This makes you look more attractive to banks, credit card companies and other lenders.
Our clients’ experience is that shortly after you obtain your discharge, they begin getting credit card offers again. You should be aware that at first, the banks, credit card companies and other lenders will want more money down and will want to charge you higher interest rates. If you are careful, keep your job, start saving money, pay your bills when due, and do things that put good marks on your credit report, the quality of your credit will get better and better over time. Generally, if a client has not re-established good credit in 2 to 4 years, sufficient to even buy or refinance a house, it’s not because they filed bankruptcy. It generally means that something else has happened after the bankruptcy to damage their credit. The truth is that we have had lots of clients buy cars and trucks almost immediately after they finished with their bankruptcy. A few clients have even managed to buy a car or truck while they were still in bankruptcy.
Filing bankruptcy means you’re just a bad person. NOT TRUE
It’s just the opposite. Filing bankruptcy means you’re a very good person, acting responsibly, exercising rights that you have under the Constitution of the United States and enacted for individuals just like you by Congress. You cannot be a bad person when you act within the law and on behalf you and your family. Filing bankruptcy gets rid of certain debts. Getting rid of certain debts frees up money to better take care of your family. Freeing up money to better take care of your family lets you put things back in their proper order: Family first. Putting your family first is good and honorable and noble and doing so means you’re a good person. There are good reasons why over 1,000,000 families across the United States file bankruptcy every year. Pay reductions, job loss, uninsured medical expenses, death of a family member and other family emergencies, bad decisions, failed businesses, etc., are just some of the facts of life. Times are tough in Michigan and life here can be very harsh. Sometimes the money’s just not there. The bankruptcy laws were created by Congress with just these circumstances in mind and Congress’ intent was to make sure that you and your family have a way to overcome the overwhelming burden of debt, to make sure that your family does come first, and so that you and your family can have a second chance at a “fresh start”.
Filing bankruptcy will damage your credit for 10 years. NOT TRUE
You are getting the fact that bankruptcy is reported on your credit report for up to 10 years confused with the effect that reporting will have on your credit. Just because something is reported on your credit report does NOT necessarily mean it will have a negative effect on your credit score. By the time you meet with a bankruptcy attorney, your credit is probably severely damaged. If your credit score has already been damaged, bankruptcy cannot and will not diminish it further. While a bankruptcy is reported for up to ten years, bankruptcy is not used to calculate your credit scores. So, if you can begin to pay your bills on time, after filing for bankruptcy, your credit score will begin to improve fairly soon. You can begin to improve your credit score by acting responsibly and paying your new debts as they become due. If you have not re-established good credit in 2 to 4 years from the time that you file bankruptcy, it probably has nothing to do with the fact that you filed a bankruptcy. And, it certainly has absolutely nothing to do with the fact that your credit history still shows an old bankruptcy filing.
If you’re married…both you and your spouse have to file for bankruptcy. NOT TRUE
We have filed hundreds, and probably thousands of cases, where a husband, or a wife, but not both, filed bankruptcy. In many of those cases, where husband and wife both have a lot of debt, it makes sense and saves money for them to both file, but it is not a ‘requirement’ of the bankruptcy laws. In many situations, however, there is no good reason at all for the second spouse to file. In those situations, we file for only the spouse who needs the help, and leave the other spouse completely out of it. You should understand that under the new laws, the income of both parties is used as the basis for certain calculations that have to be made, but the use of a non-filing spouse’s income does not involve the non-filing spouse in the bankruptcy in any other way.
It’s really hard to file for bankruptcy. NOT TRUE
Filing for protection under the U. S. Bankruptcy Code is not difficult in the hands of the experienced bankruptcy attorneys. Gudeman & Associates is a knowledgeable and experienced team of attorneys, paralegals and legal assistants. Gudeman & Associates will use its knowledge and experience to assist you with your bankruptcy. With our help, filing bankruptcy is easy. The decision to file may be difficult, but once you make the decision, filing is easy. The relief that you will experience by stepping up to your financial responsibilities and your family’s needs will make your decision to act worth it. Gudeman & Associates have been practicing bankruptcy law for over 12 years, and with the help of our experienced attorneys, we have helped thousands of families get the relief those families needed and had a right to receive. When you want bankruptcy done right, you go to experienced attorneys. Gudeman & Associates has that experience. We are one of the largest debtor bankruptcy firms in Michigan. We take pride in providing good, quality services at reasonable cost. Because our clients are satisfied with our legal services, we have a steady stream of referrals from them.
Only deadbeats file for bankruptcy. NOT TRUE
Good people, who realize that they have a duty and responsibility to put their families first, file bankruptcy. Most of the people who file bankruptcy are good, honest, hard-working people, who file for protection as a last resort after months or years of struggling to pay their bills. They have exhausted all their resources: family savings, §401(k) and IRA Plans, life insurance cash values, the equity in their home. Everything they have had. You’re completely wrong in thinking that you’re a deadbeat if you file bankruptcy. If you need to file, filing bankruptcy is actually one of the most positive, responsible, honorable and noble steps you can take on behalf of your family and your family’s future, happiness and prosperity. The right to file for bankruptcy is arguably the most powerful right that the United States provides to anyone other than the right to vote. It’s possible that you have overwhelming debt, or you got behind on something as valuable as your house or car, after some life-changing experience, such as a loss of your job, salary reduction, divorce, a failed business venture, a serious illness, or some family emergency. Or perhaps, you honestly and mistakenly fell into debt at a young age before you knew better, before you knew anything about budgeting or how to manage money. By addressing your current situation, you are exactly the opposite of a “Deadbeat.” Deadbeats are the people who continue to let themselves get crushed by debt year after year, or continue to let creditors use and abuse them, who continue to pay out good, hard-earned money to creditors at the expense of their families, and who continue to just sit back and take it, when there is something they can do about it. If you were a deadbeat you wouldn’t care. The good, responsible people, who file bankruptcy, care about themselves and their families.
Even if you file for bankruptcy, creditors will still harass you and your family. NOT TRUE
The minute you file bankruptcy, the Bankruptcy Court issues an order called the “automatic stay.” The automatic stay tells all of your creditors to leave you alone, or else. It is issued pursuant to United States Code 11, Section 362. The automatic stay protects you from any and all collections actions. After you file bankruptcy, the creditor is not even allowed to talk to call or write to you. In addition, the creditor must stop any collection attempts already started. The automatic stay is very powerful. It is enforced by the United States’ Courts and it makes sure your creditors leave you alone. If creditors violate the Automatic Stay, they can be severely sanctioned and penalized by the court. Fight back with the rights that you have! The U.S. Bankruptcy Code is one of your most powerful set of rights. Once you reach out for the protection that only the U.S. Bankruptcy Code can provide, you will not receive any more phone calls. You will not receive any more collection letters. You will not receive any more lawsuits. No repossessions. No foreclosures. No more threats. Nothing. The protection and help that you get by taking advantage of the U.S Bankruptcy Code is that powerful. Nowhere else can you get it! The attorneys at Gudeman & Associates feel great that we can help our client obtain this kind of aid.
If you file for bankruptcy, it may cause more family troubles and may even lead to divorce. NOT TRUE
The opposite it usually true. Filing bankruptcy is not the problem. The problem is not being able to pay your bills and not being able to provide for your family. This is what causes the stress and anxiety to build and build. All good, honest, hard-working people feel a strong need to pay their bills. Not being able to pay those bills causes those people to feel enormous stress. Unless you do something to relieve this stress, it can quickly build to a breaking point such as divorce. Bankruptcy is designed to get you out from under the burden of debt, to protect your property, to lower your stress level and to let you…once again sleep at night. If your experience is like that of other couples, you will find that filing bankruptcy (and lowering the stress level) can be a crucial first step in bringing the love and caring…not to mention hope…back into your relationship.
You can’t get rid of back taxes through bankruptcy. NOT TRUE
We get rid of back taxes for our clients all the time. By “taxes,” we mean ‘income’ taxes, and by “old,” we mean income taxes more than 3 years old. Under the law, there are 4 or 5 qualifications that have to be met, but once these are met…in bankruptcy…those taxes are gone. Understand, however, that you have to have filed your returns in order for the taxes to be “old.” Filing the return starts the date from which the 3 year period begins.
You can only file once for bankruptcy protection. NOT TRUE
The truth is, you can file and get a “discharge” under Chapter 7 once every 8 years. As for filing a Chapter 7 after filing and getting a discharge in Chapter 13, the wait is 6 years, computed from one “date of filing” to another. As for filing a case under Chapter 13 of the Bankruptcy Code, the wait is only 4 years after a prior discharged Chapter 7, or 2 years after a prior discharged Chapter 13 case. If a prior bankruptcy case was “dismissed” as opposed to “discharged”, in most cases, there is no required wait time between bankruptcy filings. Hopefully, however, filing one bankruptcy will be enough to get your life back.
You can pick and choose which debts and property to list in your bankruptcy. NOT TRUE
You cannot select which property or debts to list. The law requires you to list all your property and all your debts, without exclusion. Most people want to leave out a debt because it is their intent to keep paying on it. You can achieve the same goal, even though you have to list the debt. If you want to keep paying on a debt after you file, you can. After you file, you can go back and pay anybody you want. Please remember that there are some debts you have to keep paying on, if you want to keep your home, car or truck, even though you list the debt in your bankruptcy. More importantly, as long as you stay current on the loan and keep the property properly insured you get to keep the property because under the U.S Bankruptcy Code the creditor is forced to let you keep it and cannot take it back. There are consequences of not knowing the truth. If you think that you “do not want bankruptcy,” consider the following: What if everything you’ve ever been told about bankruptcy is not true? What if everything you have come to believe about bankruptcy is false? If you had the chance to learn the truth, wouldn’t you want to know? What if filing bankruptcy is by far the absolute best thing in the world for you, your family, your future happiness and your future prosperity? If you had the chance to learn the truth, wouldn’t you want to know?
It would be an awful shame if you never found out the truth; and because you didn’t find out the truth, you never filed bankruptcy, and because you never filed bankruptcy, your family had to suffer the consequences of your misunderstandings for many years?
Do yourself a great favor: Call Gudeman and Associates at 248-546-2800 to set up your free consultation with an attorney who knows the bankruptcy code. The appointment will cost you nothing and there is no obligation on your part to retain us as your attorneys. You will leave that appointment with the truth and be better able to make educated decisions that will affect you and your family for the rest of your life. Please do not make those decisions without having spoken to us.