Nobody spends their life building up to a filing for bankruptcy. Nobody ever wants to go there. Unfortunately, sometimes circumstances and choices make filing for bankruptcy necessary. Bankruptcy is a constitutionally protected right, included by the founding fathers to prevent people being sent to jail for debts or having their property seized without recourse. That’s just one of the many bankruptcy secrets out there that you should know before deciding to file for Chapter 7 or Chapter 13 as an individual, or Chapter 7 or Chapter 11 as a business.
10 Biggest Bankruptcy Secrets
- One of the biggest myths about bankruptcy is that when one spouse of a married couple is filing for bankruptcy, then the other spouse has to file as well. This is not so, and one of the biggest bankruptcy secrets is that marital property is protected by tenancy by the entirety.
- As with all court filings that are not specifically sealed by a judge, your bankruptcy is publicly available information. However, unless you are a celebrity it is very unlikely that anyone will now accept your creditors and those friends and family with whom you share the information.
- While filing for bankruptcy does not erase all of your debt, it does erase a large portion. Spousal and child support, student loans, and cannot be erased. However, paying those down is a lot easier without a mountain of credit card or medical debt sapping your finances each month.
- Once you file for bankruptcy all collection actions are terminated immediately. This is called the automatic stay and it goes into effect immediately upon filing any chapter of bankruptcy. Your creditors cannot collect, sue, or take any other action against you and actions currently in progress are halted.
- One of the biggest bankruptcy secrets is about who should file for bankruptcy. There are many bankruptcy preparers advertising cheap rates, but in this case, you definitely get what you pay for. Bankruptcy preparers are not allowed to offer legal advice, only an attorney licensed by the state of Florida can do that. Likewise, clerks and officers of the court cannot help you with legal advice on filing a bankruptcy. Talk to an attorney about your bankruptcy in order to get the best legal advice.
- There’s a lot of stigma when it comes to filing for bankruptcy. People who file our characterized as deadbeats who want to work the system. It’s just not so. Most people who file for bankruptcy as individuals have outstanding debts that make it impossible for them to pay those debts down and still keep a roof overhead and food on the table. Bankruptcy means that the creditors do get paid, just not as much as they would otherwise.
- People would like you to believe that bankruptcy follows you for the rest of your life. While it does remain on your credit report between seven and 10 years – depending on the type of bankruptcy you file – the impact of bankruptcy becomes less as the years go by. Responsible financial behavior after bankruptcy will keep you from having to file a second time.
- A lot of people think that it’s too expensive to file for bankruptcy. One of the biggest bankruptcy secrets out there is that once all those payments are eliminated by the automatic stay that there is usually more than enough to pay for bankruptcy. A lot of people are very surprised at the amount of money they have after the automatic stay goes into effect and they collect a couple of paychecks without having to turn around and immediately pay bills or deal with garnishments.
- People have been conditioned to expect that once you file for bankruptcy all your property, all your money, even your retirement accounts or Social Security will simply disappear. This is not the truth. Certain property is exempt from being attached to pay your creditors, this includes marital property owned with your spouse, the homestead exemption, personal property, a personal vehicle, and other belongings.
- After bankruptcy people worry that creditors can still come after them. However, once a bankruptcy is discharged any entity trying to collect a debt can refile a collection action. This is not so, once the bankruptcy is discharged all creditors have been paid.
When Should You File?
It’s hard to tell when you should file for bankruptcy, so many of us are conditioned to go day to day and live from paycheck to paycheck. Here are 10 signs that you should consider filing for bankruptcy.
- Do you have more than three credit cards with balances that you can’t seem to pay down?
- Are most of your cards maxed out?
- Do you use one credit card to pay off another credit card?
- Are you using credit cards for basic necessities such as groceries or gas?
- Are your credit card interest rates in the double digits?
- Are you one month or more in arrears on your rent or mortgage payment?
- Are you late by one month or more on some of your credit card minimum payments?
- Are you using payday loans or car title loans to meet weekly expenses?
- Are you receiving telephone calls or mail from more than one collection agency?
- Are you behind on your car payment to the point where you are afraid your cart will be repossessed
Van Horn Law Group Knows Bankruptcy
Founded in 2009 by Chad Van Horn, Van Horn Law Group knows bankruptcy secrets and debt inside and out. Bankruptcy is a specialty practice and filing for bankruptcy incorrectly can see your filing dismissed costing money and time. When you are ready to file for bankruptcy, retain an attorney with the experience that you need and the attention to detail that you deserve. Call our Fort Lauderdale or West Palm Beach office and schedule a free initial consultation. We are open seven days a week for your convenience. Come to Van Horn Law Group and take one step closer to being debt-free.