Top Five Bankruptcy Myths
Myth #1- You will never be able to receive credit again.
False. Although the bankruptcy will remain on your credit for about 7 to 10 years, you can start rebuilding your credit once your bankruptcy is discharged. You can usually qualify for a decent home mortgage rate after about 2 years. Watch your income debt ratio and try not finance more than 40% of your credit limit.
Myth #2- You will lose everything you own.
False. In almost all personal bankruptcy cases, the debtor is allowed to keep their property. In most situations the property is claimed as exempt and cannot be taken away. For example, there is a homestead exemption that allows debtors to protect their homes from seizure.
Myth #3- Both you and your spouse must file together.
False. You may file jointly or separately.
Myth #4- Creditors are still allowed to harass you.
False. Once you file bankruptcy, the automatic protection is in effect and they are no longer allowed to harass you. If they continue to contact you, there are remedies under the bankruptcy code.
Myth #5- A credit counseling firm or debt consolidation will help you avoid filing bankruptcy
False. In most instances, debtors with significant debt end up filing for bankruptcy anyway. According to a recent New York Times article: “Consumers who turn to these companies sometimes get help from them, personal finance experts say, but that is not the typical experience. More often, they say, a settlement company collects a large fee, often 15 percent of the total debt, and accomplishes little or nothing on the consumer’s behalf.”
DLG Luce LLP is a Texas based civil litigation law firm with offices in San Antonio and Austin, Texas. Our firm represents clients in a diverse field of legal matters, including bankruptcy representation. If you are interest in scheduling a consultation to discuss bankruptcy legal options, contact our office here.