Bankruptcy can be a mysterious process for debtors, many of whom are facing the reality of filing for bankruptcy for the first time. There’s also the stigma – debtors are often hesitant to go through with bankruptcy for fear of employers, friends, and family members finding out. But most of society’s stigma regarding bankruptcy stems from misinformation and lack of knowledge.
At Belsky, Weinberg & Horowitz LLC, our Baltimore bankruptcy attorneys are here to answer your questions and offer clarity during dark financial times. Below are common myths that we would like to dispel. We hope that you find this information useful and that once you’re ready to move forward with your debt, feel free to talk to us and learn about your debt relief options.
Bankruptcy is a sign of failure.
A large number of people who file for bankruptcy are honest and hard-working people who have fallen into debt due to uncontrollable factors, such as a health crisis, a bad economy or a job loss. Bankruptcy provides these individuals with a way to break free from their debt and move forward with their lives. It is an honest solution that has helped many people overcome difficult challenges in their lives that they could not foresee.
You will lose all everything you own, including your home and car.
Most people are protected by bankruptcy exemptions, which allow you to keep most of your important items, including your home and car.
Filing for bankruptcy prevents you from getting credit for up to 10 years.
The bankruptcy report stays on your credit report for 10 years, but this does not mean that you do not have access to credit or that your credit score won’t recover. Immediately after bankruptcy, individuals can work towards rebuilding credit. If you maintain steady payments, you can reestablish good credit and even take out loans within 2 to 4 years of filing for bankruptcy.
You can’t file for bankruptcy if you have a job.
There is no income limit for bankruptcy filers, only limits on your eligibility for certain types of bankruptcies. Chapter 13, also known as a wage earner’s plan, allows debtors to repay your debt through payment plans. You can keep your job and pay back your debt over a period of time.
Both spouses have to file for bankruptcy.
Married couples are not required to file together, although it might benefit some to do so, such as if both spouses owe substantial debts that can be discharged.
Medical bills and back taxes can’t be discharged in bankruptcy.
Medical bills are considered unsecured debt, meaning they can be discharged in bankruptcy, including Chapter 7. With back taxes, you may be able to get rid of old income taxes once certain conditions are met.
Not sure what’s true and what’s not? Ask our Baltimore bankruptcy attorneys at BWH.