You lost your job or your pay was cut. You have medical bills pilling up. You paid for your living expenses with your credit cards and they are now maxed out. Calls are coming in from creditors and you’ve been threatened with repossession of your car or foreclosure of your home.
As you fight large banks and credit card companies who use their power to disrupt your life you might feel alone in your battle against harassing phone calls and threats.
In spite of this, you’re scared to file bankruptcy. You’re worried about what will happen to your credit rating. You wonder if you’ll be able to get another job or rent an apartment with a bankruptcy on your record. Fear of bankruptcy is common among the clients who come into our office.
But, information is power. And you have the right to all the information you need to make the best choice for you and your family.
In spite of the fact that bankruptcy provides legal relief to people (and businesses) who are under tremendous financial pressure, you may still be reluctant to consider this option.
Perhaps you see bankruptcy as morally wrong. Maybe you were taught that keeping your word is your most important asset, the thing no one can take away from you.
The truth is bankruptcy has long been recognized by courts as the opportunity for individuals and companies to get a “fresh start.” It is a fully legitimate option when you face exorbitant fess from banks and credit card companies or you are draining any savings or retirement account you have just to pay the bills each month.
In all the fear and worry, people also overlook the fact that very famous and successful individuals have used bankruptcy to improve their well-being and lives. They then go on to be even more productive and successful after bankruptcy. For example, both Abraham Lincoln and Walt Disney declared bankruptcy. After his bankruptcy, Abraham Lincoln was able to go onto much greater things as President. Bankruptcy is not the end of the line. In fact, it is often the new beginning needed for individuals and families.
Companies and corporations also use bankruptcy to reorganize their business finances. Donald Trump has twice used bankruptcy to reorganize companies. US Airways filed bankruptcy twice and then went on to acquire America West. Bankruptcy is a viable option for businesses and companies. Why should it not be a viable option for individuals?
There are a lot of myths floating around about bankruptcy that might keep you from considering the relief it offers.
Myth #1: I’ll lose everything
The goal of bankruptcy law is not to strip you of all your belongings and sell them off to pay your creditors. State and federal bankruptcy laws are written specifically to allow you to exempt certain kinds and amounts of property to ensure you get the fresh start you need. Your car, home, and personal belongings all fall under the exempt property category in Arizona.
To read more about the kinds and amounts of property you can exempt see our blog on property exemptions.
Myth #2: I’ll never be able to get credit again
There are real steps you can take after bankruptcy to build up your credit. The reality is that your credit rating has most likely been negatively impacted by your current financial crisis. Although bankruptcy will stay on your credit report for 7 – 10 years depending on what type you file, you can actively repair your credit. One way many clients begin this is by getting a credit card and paying it off each month. Many people find that within 6 months to a year after filing bankruptcy they begin to receive credit card offers in the mail.
To read more about rebuilding your credit after bankruptcy see our article/videos here.
Myth #3: Since the law changed, it will be expensive and difficult to file bankruptcy
Yes, it is true that in 2005 bankruptcy laws were changed significantly. However, since that time we have helped thousands of clients file for bankruptcy. We have the experience and knowledge to effectively guide you through your bankruptcy filing.
Myth #4: I’ll have to go to court if I file bankruptcy
Most people have never set foot in a courtroom, so it is normal to have some fear of bankruptcy if you believe you will have to appear in court. Normally you won’t have to go to court. You will have to appear at a meeting of creditors (referred to as a 341 meeting of creditors) and the bankruptcy trustee. Your creditors have the right to come to this meeting, but they rarely do.
Myth #5: If my spouse doesn’t want to file bankruptcy, I can’t file as an individual
Even if you are married you can file as an individual. Depending on the circumstances, it may be beneficial to file separately. But, if your spouse is unsure about bankruptcy, it can often be helpful to schedule a joint conference to discuss his or her questions or concerns about the process with one of our attorneys.
We want you to be well informed about your decision to use bankruptcy. Bankruptcy may not be the best option for everyone. However, it can be an effective means for many people to get out of financial distress. In 2011, there were over 1.3 million bankruptcy filings in the United States. You are not alone in facing financial hardship or in considering bankruptcy. There is no shame in using the legal process of bankruptcy that is being used by millions of American individuals and companies each year.
Don’t rely on your friends or family to give you information about bankruptcy. Make your decisions based on the facts, not myths or fear. In our practice we are committed to educating you about all the facts you’ll need to know when considering bankruptcy and throughout the filing process. We encourage you to call our office and get a consultation with one of our attorneys. We will walk you through the process and answer any questions you have.