If you research bankruptcy online, you will find many conflicting opinions. So how do you know what is right and what is wrong? The truth of the matter is, the Bankruptcy Trustees and Judges make the final judgment. Although the Federal Bankruptcy Code dictates how Bankruptcies should be practiced, the trustees and judges can and will interpret the law differently in their local Bankruptcy Division. As experienced Houston bankruptcy attorneys at Guerra | Days Law Group, we will try and clear up some of the most common myths based on our hundreds of bankruptcy cases.
Myth: If you have a job, you can’t file bankruptcy
In order to qualify for a Ch. 7 Bankruptcy, a Houston bankruptcy attorney from our office can determine if you meet certain income requirements based on the median income for households of your size in your state of residence. In a Ch. 13 Bankruptcy you must have a feasible plan to pay back your creditors based entirely on your income. This myth is absolutely busted.
Myth: Medical bills are not dis-chargeable in bankruptcy
Nearly all unsecured debt is dis-chargeable under the Bankruptcy Code. Medical bills, credit cards, personal loans would certainly fall under the category of unsecured debt. This is a myth most likely started by debt collectors to deter debtors from taking advantage of the benefits of bankruptcy
Myth: Full repayment of debt is required in a Chapter 13 bankruptcy plan
Every Ch. 13 case is different, but at the end of the day, a Houston bankruptcy attorney from our office will customize a plan based on your disposable income, what creditors you owe, and what assets you are exempting. While there are Ch. 13 plans that require repayment of debt in full, most cases pay minimal or nothing to unsecured debts. To say that all Ch. 13 plans require to pay all debts in full is simply untrue and not the norm.
Myth: You lose everything you own in bankruptcy
One of the main reasons individuals file bankruptcy is to prevent foreclosure. If you could not exempt your homestead individuals would lose one of the main benefits of bankruptcy. In addition, about 95% of bankruptcy cases filed by individuals are “no asset” cases in which the debtor keeps everything they own. Exemptions allow the debtor to keep certain assets and some assets, like pensions and retirement accounts, are beyond the reach of bankruptcy trustees and creditors.
If you or someone you know are considering filing for a bankruptcy, make sure you talk to a Houston bankruptcy attorney from our office that has experience and knowledge of the local bankruptcy rules. They can help you determine which bankruptcy is best for your circumstances and make sure you are getting the full benefits of filing bankruptcy. Call today for a free consultation.
Myth: You cannot get credit for 10 years if you file bankruptcy
The Fair Credit Reporting Act allows the filing of a bankruptcy to be reported for up to 10 years, hence that is likely why people believe this to be true. Fortunately, just cause it is reported does not mean that you cannot get credit or improve your credit after filing. In fact, with a Ch. 13 you can borrow money during your repayment plan. After a Ch. 7 discharge, you are likely to get many credit card offers since the credit card companies know many of your old debts have been discharged. Although these credit lines may not be at the best rates, credit is available and credit is able to be improved well before the 10 year mark. How fast depends on how much effort each individual puts towards that goal.