Be Aware of Bankruptcy Myths and Half-Truths

Remember the old saying, "Consider the source?"  Well, when you get your legal advice from the internet or your know-it-all friend or relative, remember to "consider the source."  There are many half-truths and outright fabrications being told about the Bankruptcy process.  Creditors typically use these myths to dissuade you from filing Bankruptcy and to settle your debt with them.  Here are some common myths to watch out for if you are considering Bankruptcy.

First, you do not lose everything you own when you file a Bankruptcy case.  There are significant legal protections and exemptions that shield many assets, including retirement plans, equity in your home or vehicles, and personal items such as household furniture, clothing, and even collectibles.  Statistically, only one (1) Chapter 7 case in twenty-five (25) is an "asset case" where property may be liquidated.  I have rarely seen an actual "asset case".  Even if you own non-exempt property, such as an extra car, recreational vehicle, or stock options, the Trustee assigned to your case may not utilize his or her resources to liquidate your property.  Moreover, it takes time and money to obtain and sell property, so the Trustees typically choose significant assets with a lot of value, as opposed to assets with less value.  If you file for Chapter 13 Bankruptcy, you can keep all of your property, whether it is exempt or not.  In this type of Bankruptcy, you are required to pay a percentage of your debt owed to unsecured creditors.  While you get to keep any non-exempt assets, you may be required to pay a higher percentage to the unsecured creditors based on the value of these assets.

Another popular myth is that you will never be able to obtain credit again.  Creditors love using this one against you.  In most cases, the debtor's credit is already ruined before filing.  The Bankruptcy actually stops the continuing effects of bad debts, including penalties, interest, and attorney fees, and allows the debtor to rebuild his or her credit.  Although it takes time and effort to rebuild your credit after a Bankruptcy, it can be done.  Surprisingly, most credit scores increase after a discharge in Chapter 7, or after a debtor has made several payments in a Chapter 13 Bankruptcy.  In addition, many individuals are able to use their improved debt-to-income position to make wise financial decisions in the future and demonstrate financial responsibility after the Bankruptcy.  This leads to more options with lenders down the road.  People with stable jobs, a solid credit history after the Bankruptcy, and low debt loads are able to obtain very good credit terms and even obtain a home loan within a couple of years after their Bankruptcy cases.

Finally, some believe that you can be fired by your employer as a result of the Bankruptcy filing.  While every case is different, the federal law generally prohibits an employer from firing an employee solely on the basis of a Bankruptcy filing.  This is a form of discrimination that is simply not tolerated by law.

To gain a better understanding of consumer Bankruptcy and how it can help you, please call the Law Office of Nicholas R. Westbrook today at (713) 893-6204.  It is critical to get legal advice from an experienced Houston Bankruptcy Attorney, as opposed to some website or relative.  Mr. Westbrook is an experienced and dedicated Bankruptcy Lawyer who will fully explain the law in understandable terms and lead you down the path of financial recovery.  Call our office today to schedule a FREE consultation at one of our convenient locations around Houston.  Stop letting debt ruin your life.