Truths about Bankruptcy Laws, Eligibility and Recovery
Misinformation about bankruptcy is widespread. There are myths that have been actively perpetuated -- some for marketing reasons and there are misconceptions that accurate information quickly dispels. We want you to have solid information you can depend on, in order to get the debt relief you need.
Here are a few myths and misconceptions, paired with facts and observations based on our extensive experience.
False: Only the destitute and irresponsible file bankruptcy.
This is incorrect, particularly in light of our modern economy. A 2008 New York Times article announced: "Attorneys are reporting more consultations with middle-class families that have six-figure incomes." Most bankruptcy filers have suffered a serious setback beyond their control, or have fallen behind in the honest effort to support themselves and their families.
It may make you feel better to hear about some of the famous people who have filed bankruptcy and have lived not only to tell their story, but to succeed in other ways: Larry King, Cyndi Lauper, Michael Jackson, Jerry Lee Lewis, Gary Coleman, Marion Jones, Gaylord Perry, Dorothy Hamill, Lawrence Taylor, Tony Gwynn, Former Texas Governor John Connally, Philip II, King of Spain (twice), Abraham Lincoln, Milton Hershey (Hershey Chocolate Company), P.T. Barnum, Walt Disney, Rembrandt, John James Audubon and Samuel L. Clements (Mark Twain).
False: Changes in the law have made filing Chapter 7 bankruptcy extremely difficult or impossible for the average person.
Most people who could have filed Chapter 7 before the "reforms" of 2005 can still eliminate debt this way today. There are some additional requirements, including income restrictions and a need to complete a debtor's education course, but relatively straightforward, dependable debt liquidation is still within reach.
False: Filing bankruptcy means giving up all your property.
Both Chapter 7 and Chapter 13 of the bankruptcy code allow filers to keep certain exempt personal assets often including their home, vehicles, personal investments and qualified retirement savings accounts.
False: Filing bankruptcy ruins your credit forever.
It is possible to rebuild credit and have a productive life after bankruptcy. Policies are changing, and it may be even easier to do this in the aftermath of our current recession.
False: Bankruptcy is something to feel ashamed of.
This is far from the truth. It is fairly common for honest, hardworking people to get in a financial predicament (due to bad luck or otherwise) which leaves them no alternative but to file bankruptcy. Congress created the right to file chapter 7 bankruptcy by referring to a biblical passage which might be paraphrased: "Every seven years, lenders should forgive debt." Our bankruptcy laws have a strong historical foundation and they are necessary for the overall health of our economic system. Getting a fresh start is your legal right if you qualify, and exercising that right should not be a source of embarrassment.
These truths may simply scratch the surface of what you have heard. For the legal counsel you need to get a fresh start, please contact a lawyer at our Phoenix, Arizona, law offices today.
