Myths About Bankruptcy in California
Experienced San Jose Bankruptcy Attorney
There are a number of misconceptions about bankruptcy that deter people from considering filing for bankruptcy. There are also misunderstandings about what bankruptcy can and cannot do to help those in financial turmoil. With more than a decade of legal experience, San Jose bankruptcy lawyer Gemma V. Reyes helps clients understand how bankruptcy laws can apply in their specific situation and guides them through the process of obtaining debt relief.
For answers to your bankruptcy questions, contact our law firm online or call 408-292-6289 to arrange a consultation.
Dispelling Bankruptcy Myths and Misconceptions
Myth: I can discharge all of my debt in bankruptcy.
While Chapter 7 bankruptcy enables eligible individuals to discharge a significant amount of debt, there are debts that cannot be eliminated in a Chapter 7 bankruptcy. For example, student loans, child support arrears, recent tax debt and certain other debts cannot be discharged. Additionally, secured loans, such as a secured mortgage or car loan, cannot be discharged unless you are willing to surrender the property or asset.
Myth: If I am about to file for bankruptcy, I can accrue as much credit card debt that I want now and eliminate it in bankruptcy.
While credit card debt is dischargeable in a Chapter 7 bankruptcy, there are strict guidelines about the debt included in your bankruptcy petition and schedule of debts. Credit card debt acquired within a specific period before your bankruptcy petition may be ineligible for discharge. Additionally, unscrupulous accumulation of credit card debt prior to filing for bankruptcy may be construed as fraud and result in additional liability concerns.
Myth: Filing for bankruptcy automatically and permanently stops foreclosure.
While the automatic bankruptcy stay will automatically stop foreclosure proceedings from moving forward, foreclosure proceedings may re-commence in the future depending on how your bankruptcy solution was formulated. If you proceed with a Chapter 13 bankruptcy and either fail to comply with the repayment plan or fail to make your regular monthly mortgage payment, your home could face foreclosure again.
Myth: If I filed for bankruptcy in the past, I can't file again now.
Bankruptcy laws attempt to curb excessive bankruptcy filings by setting requirements on the length of time between bankruptcy petitions. The length of time required between petitions will vary depending upon the Chapter of bankruptcy you previously filed and the Chapter of bankruptcy you intend to file. For example, if you previously filed for Chapter 7 bankruptcy, you will not be eligible to repeat a Chapter 7 bankruptcy for eight years. However, you may be eligible for a Chapter 13 bankruptcy within only four years.
Myth: Moving won't affect my bankruptcy petition.
Your bankruptcy petition will be filed wherever you have resided for 91 of the 180 days prior to your bankruptcy filing. While bankruptcy laws are federal, there are some differences in how those laws are applied in each state. Some states, for example, do not allow individuals to benefit from federal bankruptcy property exemptions. Instead, they have state-specific exemptions. Other states allow individuals to choose whether they wish to take advantage of state or federal exemptions and some states only allow federal exemptions. This can make a significant difference in what property you can or cannot keep when filing for a Chapter 7 bankruptcy.
Myth: My credit will permanently be destroyed after filing for bankruptcy.
Contrary to what many people believe, filing for bankruptcy does not ruin your credit. It actually creates a foundation for your credit to start to improve. In filing for bankruptcy, all debts addressed in your bankruptcy petition are effectively removed from your credit record. Additionally, there are techniques to repair your credit score after filing for bankruptcy.
Contact a Santa Jose Chapter 7 Bankruptcy Law Firm
Whether you are contemplating a Chapter 7 or Chapter 13 bankruptcy, we can explain your options and identify a solution that is right for your situation. Contact a skilled San Jose bankruptcy attorney to discuss your specific situation. We are focused on finding the right debt relief solution to fit your needs. Call 408-292-6289.
We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.