The Truth About Bankruptcy

Bankruptcy Law in Dallas and Fort Worth

Many people stereotype bankruptcy as taboo, and fatal to having a sound, secure financial future. Others may think bankruptcy is a quick and easy way to wipe out debt. The fact is, in today’s economy more and more people, regardless of their status in life, are turning to bankruptcy as a viable solution to a bad situation.

Common Misconceptions About Bankruptcy

Read through some common misconceptions people have about bankruptcy, listed below, and find out the truth about bankruptcy.

• Everyone will know I’ve filed for bankruptcy. Chances are that unless you’re a celebrity or prominent individual, no one will know you filed for bankruptcy.
• My employer will know I filed for bankruptcy and will fire me. Under the U.S. Bankruptcy Code, an employer may not discriminate against you because of a bankruptcy.
• All debts are absolved in Chapter 7 Bankruptcy. ÝAlthough child support, alimony government-issued or government-guaranteed student loans and debt from fraud cannot be erased,Ýyou may keep all of your property with a Chapter 7 Bankruptcy.
• I’ll lose everything I own if I file for bankruptcy. This misconception keeps people who should file for bankruptcy from doing it. The government will not sell everything you own and you won’t become destitute as a result of filing for bankruptcy.
  
• My credit is ruined for life. Nothing could be farther from the truth.  You will get credit offers from subprime lenders charging very high interest rates. Buying a house or car at a good interest rate will be tough for awhile, but you will be able to obtain credit at higher interest rates. And you can slowly rebuild your good credit standing. If you have a credit card with a zero balance when you file for bankruptcy, you don’t have to list it, and you may be able to use that card at its existing interest rate after the bankruptcy.
• I’m married so my spouse also has to file for bankruptcy. If you have a great deal of debt in your name only, your spouse may not have to file for bankruptcy also.  However, if you both have debts you wish to have discharged that you’re both liable, you should file together. Otherwise, creditors will demand payment for the entire amount from the spouse who doesn’t file.
  
• Only people who can’t manage their lives file for bankruptcy.ÝIn todayís economy, many people struggle due to layoffs or job terminations.Ý A divorce, serious illness or other dire circumstances happen to good people like you. You want to be able to pay your bills, but you just keep getting behind. In such instances, bankruptcy could be the right option for you, as it is so many people these days.
  
• Filing for bankruptcy will improve my credit rating because all those debts will be gone. This is totally false. Bankruptcy does give you a fresh start, but it will not improve your credit rating.  However, your credit rating is most likely quite low due to dire circumstances, and bankruptcy may be the most viable option to get you back on your feet.
  
• I can only file for bankruptcy once. Not true. You can file for Chapter 7 bankruptcy only once every eight years. For Chapter 13, you only have to wait two years to file again and four years between a Chapter 7 and Chapter 13.
  
• I don’t need an attorney to file for bankruptcy because I can do it myself. While you can file on your own, it is not recommended. Bankruptcy filing is a highly complex and intricate process, and you need an experienced and meticulous attorney to handle your case. Otherwise, you could be doing yourself and your family a great injustice.
• Before I file for bankruptcy, I should run up all my credit cards so I won’t have to pay for the things I bought. That’s the last thing you should do; as it is called fraud. Before you file for bankruptcy, your trustee will review all your purchase transactions and make sure there is nothing that smacks of fraud.
  
• There is a new law that says I must pay everything back. In a Chapter 7 Bankruptcy, all debts are eliminated except for certain taxes, child support/alimony and student loans.
  
• A new law will not allow me to go bankrupt. The 2005 Reform Act made it harder to file for bankruptcy but it is still possible. The Law Office of Truman Coe can help you determine if bankruptcy is a viable option for you.
  
• Even if I go bankrupt, I still have to pay my credit card bills completely off. This is a fallacy. As credit cards are unsecured debts, they will generally be discharged by bankruptcy.
  
• I can negotiate with creditors to accept only a portion of my debit. Sometimes this is true with credit card companies. However, creditors often sue for debts owed. If you are sued, unless you have a valid reason for not paying the entire amount, you will lose your case. They will file a judgment against you and may garnish your wages or put a lien on your property. Even if you settle, the amount forgiven is considered income to you and you will be taxed on that amount.
  
• After completing a credit counseling course, I must wait six months before filing for bankruptcy. Not true. Credit counseling must be completed within six months of filing for bankruptcy. There is no waiting period to file for bankruptcy after completing a credit counseling course.
  
• A debt settlement firm will help me pay off my debts in three years for less at a deep discount so I don’t have to file for bankruptcy. Debt settlement firms are not attorneys and they can’t do any more than you can do yourself – work out a payment plan. Creditors do not have to settle with you. Often, debt settlement firms will keep most of the money and little goes toward the settlement. Many government agencies warn against using a debt settlement firm.
  
• I should leave one of my credit cards out of the bankruptcy. All debts must be listed on your bankruptcy petition, even ones to friends and family.
  
• Bankruptcy does not apply to many banks. Generally all unsecured debt will be discharged in a Chapter 7 bankruptcy. In Chapter 13, the amount paid back will depend on your payment plan.
  
• Bankruptcy is expensive. Most bankruptcy attorneys have payment plans. At The Law Office of Truman Coe, we will work with you to create the payment plan that’s right for you.

Who Files for Baynkruptc?

The following are some surprising statistics from a recent major study of bankruptcy debtors:

The average bankruptcy filer is age 38.

Couples filing jointly comprise 44% of all bankruptcy filings.

Of those filing bankruptcy alone, 30% are women and 26% are men.

Most bankruptcy filers are slightly better educated than the general population.

2 out of 3 Bankruptcy filers have lost their jobs.

50% of all bankruptcy filers have experienced serious health problems.

91% of bankruptcy filers have suffered a job loss, medical crisis or divorce.

40% of bankruptcies are a result of medical crises, unemployment or divorce.

90% of filers have two car payments, a house payment and an average of $2,500 in credit card debt.

10% of filers were delinquent only 5–29 days prior to bankruptcy.

For more information or a free initial consultation and evaluation, please call 214.688.1393 or 817.870.1960 or fill out the Case Evaluation Form, on the home or contact page, and one of our attorneys will contact you.