Common Bankruptcy Myths
Most people believe at least some of the myths about bankruptcy. We hope that by correcting some of these common myths, we can help you decide if bankruptcy is right for you. Levitt & Slafkes, P.C., in Maplewood, New Jersey, is a law firm that has practiced bankruptcy law for more than 30 years. We will answer all your questions and provide accurate information that dispels the following bankruptcy myths.
Myth 1: I Will Lose Everything I Own If I File Bankruptcy
This is the common myth that keeps many people who should file for bankruptcy from doing so. You are entitled to “exempt” or protect most if not all of your property under the bankruptcy law. You will not lose your pensions or IRAs. If you have a significant amount of real estate or other valuable assets that are valued over your exemptions, you would not file a Chapter 7 but would file a Chapter 13. We have filed thousands of bankruptcies. In your free consultation, we will discuss all the options that can protect your assets.
Myth 2: I Will Never Get Credit Again If I File For Bankruptcy
By the time you decide to talk with a bankruptcy lawyer, chances are you are way behind on paying your bills and your credit is already ruined. Bankruptcy wipes out most, if not all, of your debts and helps you pay your bills going forward. You will begin rebuilding your credit as soon as you file bankruptcy and obtain a discharge. After filing for bankruptcy, many clients have reported obtaining credit more easily because of their increased financial stability and lack of debt. We advise each of our clients about how to re-establish credit. There is absolutely nothing in the bankruptcy laws that prohibits you from obtaining new secured or unsecured credit after your case is over.
Myth 3: Only Irresponsible People File For Bankruptcy
Some people associate bankruptcy with irresponsibility. This is not true. Most people file for bankruptcy only after a drastic change to their lives and finances, like getting divorced, losing their job, or suffering a serious illness or injury. The truth is that in the past several years, the real estate market and job market have taken tremendous hits. Throughout New Jersey, individuals like you have experienced the negative consequences of the recession. Even the most careful savers and hardest workers have lost their jobs, their health insurance and large amounts of equity in their homes, and have found themselves in situations where bankruptcy is their only option.
Bankruptcy is nothing to be ashamed of. You’ve probably struggled to pay your bills for months and just keep falling further behind. Millions of people just like you file for bankruptcy every year. Bankruptcy is a safety net that stops you from being buried by debt you can never repay and gives you the fresh start you deserve.
Myth 4: Everyone Will Know I’ve Filed For Bankruptcy
Like any legal proceeding, bankruptcies are public information. Unless you’re a celebrity or public figure, however, it is rare that anyone except for your creditors will ever know that you filed for bankruptcy. To find out, someone would have to run a credit report or access the bankruptcy court website. No one visits your home or workplace. Everything that you discuss with attorneys at Levitt & Slafkes, P.C., is confidential.
Myth 5: Creditors Can Still Contact And Harass Me Even After I File Bankruptcy
As soon as you file for bankruptcy, the court immediately prevents your creditors from contacting you concerning your debts. All actions, from phone calls to lawsuits, must cease. This order is called an “automatic stay.” This court order prohibits any collection actions from starting against you and stops every one that has already started. The automatic stay will also stop foreclosure actions until the case is over or the court says the action can continue.
If any creditor continues bothering you in violation of the automatic stay, you have remedies available through the federal bankruptcy laws.
Myth 6: I Can’t Afford To File For Bankruptcy
The truth is that most people who seek our help can’t afford not to file for bankruptcy. Your debts will not go away on their own. In fact, the high interest keeps accruing, and your debts increase every day. Bankruptcy will eliminate those debts and the stress associated with them. We offer payment plans to allow you to become debt-free.
Myth 7: Both Spouses Have To File For Bankruptcy
Both spouses do not have to file for bankruptcy. If only one spouse is liable on the debts (such as the credit cards and the mortgage), only one spouse might want to file. If the spouses have debts that they are both liable for, they should file together. If they do not, the creditor will be able to be paid the entire amount from the spouse who did not file bankruptcy. The experienced attorneys at Levitt & Slafkes, P.C., will help you make this decision.
Myth 8: I Don’t Need To File Bankruptcy Because There Are Government And Not-For-Profit Debt Management Programs That Will Get Me Out Of Debt
Contrary to what you hear on television or radio or read on the internet, there are no government bailouts for hardworking people. Those are reserved for Wall Street. Many of the not-for-profit companies promising to help people are scams and are being investigated by the Internal Revenue Service. Debt payment plans require you to pay money and are voluntary on the part of creditors. Sadly, many people come to us when they have made large payments only to find that they are still being sued and harassed by creditors.
Myth 9: I Can’t Get A Mortgage Modification If I File For Bankruptcy
It is possible to get a mortgage modification if you file for bankruptcy. The bankruptcy court in New Jersey has implemented its own loan modification process. In making decisions on whether to give a loan modification, a lender usually looks at debt-to-income ratios. Often it is the other debt that stands in the way of the modification being granted. A bankruptcy will eliminate that debt. We have helped hundreds of people obtain modifications.
Myth 10: A Lawyer’s Fee, Not His Or Her Experience, Is Most Important
Bankruptcy is a legal proceeding. Your goal and our goal are the same – to make certain that you get a bankruptcy discharge and become debt-free. Your creditors hire very expensive and experienced bankruptcy lawyers to fight against you getting that discharge. We have had success in the thousands of bankruptcies we have filed in our more than 30 years of experience. Bruce Levitt was a bankruptcy trustee for more than 10 years and is experienced in looking at your case as a trustee will. He is able to identify potential problems before anything is filed on your case, and he will take action to correct them on your behalf. In bankruptcy law, experience matters.
This information should not be construed to be formal legal advice nor the formation of a lawyer-client relationship. The law office of Levitt & Slafkes, P.C., has been designated by an act of Congress as a debt relief agency. We have proudly assisted consumers in seeking bankruptcy relief for more than 30 years.
Contact Our Lawyers For A Free Consultation About Bankruptcy
We are caring and experienced bankruptcy attorneys who know how to make a difference in your financial situation. We are Levitt & Slafkes, P.C., in Maplewood, New Jersey. Contact us online or by calling 973-323-2953 to schedule a free consultation with a knowledgeable and compassionate attorney. We are licensed to represent residents throughout New Jersey.
We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.