Bankruptcy Myths and Prevention
With more than two decades of legal experience, we know first-hand that many people choose not to file for bankruptcy under the assumption that it will forever ruin their credit. However, when people believe these and other myths associated with bankruptcy, it prevents them from attaining financial freedom and the ability to start anew. Although bankruptcy is not the right choice for everyone, it can make a significant difference for those who are dealing with mounting and uncontrollable debt. At the Goldbach Law Group, we are committed to educating our clients and ensuring that they know the reality of filing for bankruptcy. Accordingly, the following is a list of the most common bankruptcy myths:
- I will lose everything I own if I file for bankruptcy. False. Under the U.S. Bankruptcy Code, there are several exemptions that apply to certain types of property. Meaning, you may be able to keep certain belongings, despite filing for bankruptcy.
- My credit score will be ruined. False. Unbeknownst to many people, you can start rebuilding your credit as soon as your bankruptcy action is complete. Since your debts are wiped out and accounts reflect zero on your credit report, your credit score will automatically improve.
- I probably don’t qualify for bankruptcy under the new laws. False. While filing for Chapter 7 liquidation bankruptcy is a bit more challenging than before the laws were amended, it is not impossible. Moreover, even if you don’t qualify for Chapter 7, you can still avail yourself of other bankruptcy actions, such as Chapter 13.
- I won’t be able to obtain a loan or be approved for credit cards. False. Many people receive solicitations for credit cards as soon as their bankruptcy actions are complete. Since your debt to income ratio decreases after discharging your debt, you will likely be more attractive to lenders. However, be sure to watch out for predatory loans and other “too good to be true” type offers.
- A bankruptcy will not eliminate my tax debt. Under certain circumstances, tax debt that has already been filed and remains outstanding for a qualifying period of time may be eliminated. While not all forms of tax debt can be discharged, the good news is that there are certain types that can.
Contact us now to learn more about your financial options
The reality is that bankruptcy is one of the most effective ways to help manage and ultimately eliminate your debt. At the Goldbach Law Group, our attorneys will take the time necessary to advise you of all of your financial options, including the many non-bankruptcy alternatives available to help you. For over 24 years, we have been proudly representing clients located throughout Los Angeles County, including the Whittier, Norwalk, Downey and El Monte areas. For a free confidential consultation, contact us today at (562) 696-0582 to learn more about our comprehensive legal services.