Many people do not understand California bankruptcy laws. Given the complexity of the bankruptcy code, many myths surround the subject of bankruptcy. You might feel confused and overwhelmed while seeking bankruptcy because you don't know what to expect. This is where the Los Angeles Bankruptcy Attorney comes in. Our reliable Laguna Niguel bankruptcy attorney has all the knowledge and expertise to clear all your doubts.
Common Myths About Bankruptcy in California
Most people, including some attorneys, do not understand the subject of bankruptcy properly. The situation is worse because most creditors aren't willing to shed light on the subject. Many creditors would not want you to know the incredible freedom and power that comes with bankruptcy. Your Laguna Niguel bankruptcy attorney is there to shed more light and guide you through bankruptcy. Some of the common myths about bankruptcy are:
I Don't Qualify for Bankruptcy
You should not let anyone tell you that you can't qualify for bankruptcy. You will probably be eligible for bankruptcy as long as you struggle to pay your bills or make ends meet. As long as you haven't sought bankruptcy in the last couple of years, you are likely to qualify. You might have heard that you can’t qualify for bankruptcy if you are employed. This couldn't be further from the truth. Even if you are in employment, you can be eligible for bankruptcy. In some instances, you may still qualify for bankruptcy even if you filed in the recent past. You only require proper legal advice to know your options on the best way to deal with your debts.
The Whole World Will Know That I Filed for Bankruptcy
You might have heard that the whole world or your friends and family will know about it if you seek bankruptcy. The fact that bankruptcy records are public doesn't mean that everyone will know that you filed for bankruptcy. News outlets will not share your bankruptcy information unless you are a celebrity. No one is interested in reviewing the bankruptcy records to know who has filed for bankruptcy.
Every day, thousands of people seek bankruptcy in California. Therefore no one will know that you have filed for bankruptcy unless you tell them. It is improbable for your friends and your family to make it their business to keep reviewing the local bankruptcy filings. The people who will know about the bankruptcy filing are the creditors, court officials, your bankruptcy attorney, and individuals or institutions who review your credit information. Our attorneys are professionals and will not disclose your bankruptcy information to anyone, including your relatives or close friends. Your information is safe with us.
After Filing for Bankruptcy, I Will Lose Everything
Of all bankruptcy myths, the most common is that you will lose everything after filing. Many creditors would like you to believe this myth to discourage you from applying for bankruptcy. This myth is incorrect; you won't lose all your assets after filing for bankruptcy. There are exemptions under the Chapter 7 filing. The exempt property will not be liquidated. The exemptions under Chapter 7 filing will help you keep some of your property.
A filing under Chapter 13 is more flexible. Under this chapter, you will retain your property and continue to repay your debts. The exemptions in bankruptcy cover many types of assets, including rental property, primary residence, household goods, vehicles, machinery, furniture pieces, retirement plans, and pets. Therefore, you shouldn't fail to apply for bankruptcy for fear of losing everything.
I Will Never Own Assets After Bankruptcy
Some myths go to the extent of stating that you can't own assets after bankruptcy. Our Laguna Niguel bankruptcy attorney can tell you that this is not true. Even after bankruptcy, you can still own everything you like as long as you can afford it. There are no restrictions. The law allows you to engage in any business you want and creates all the wealth you can, even after bankruptcy. The law doesn't prohibit you from holding on to valuable possessions and monetary assets.
My Credit Score Will Be Forever Ruined
Have you ever heard that your score will be ruined forever after bankruptcy? Well, this is another lie. The bankruptcy record indeed remains on your credit report for up to ten years after the filing. However, this doesn't imply that your credit score is forever ruined. You will start rebuilding your credit history immediately after filing. Most people have better credit ratings one year after bankruptcy than they did before the filing.
Bankruptcy allows you to start on a clean slate and rebuild your credit history. When you are freed of most of your debts, you will be able to pay your bills on time and save more. Your debt to income ratios levels out after bankruptcy. You can rebuild your credit rating by seeking new credit. Some lenders will be willing to lend you because you will be debt-free and ready to start afresh.
You might be surprised to learn that bankruptcy may even increase your likelihood of accessing lending. You can start seeking a secured credit card and ensuring that you repay the credit card on time. You may also consider getting a co-signer who can support you and help you access credit. Your Laguna Niguel bankruptcy attorney is committed to guiding you on how to recover and rebuild your credit rating after bankruptcy.
You Can't Wipe Your Taxes in Bankruptcy
Even if you can wipe away all taxes in bankruptcy, specific rules can be applied to determine whether it is possible to wipe taxes in bankruptcy. It is often possible to wipe away sales or income taxes that are more than three years old though this will vary depending on several factors. The rules surrounding tax waivers in bankruptcy are complicated. Therefore, it is crucial to seek the counsel of a legal expert to know the available options.
You Can't Stop Legal Action by Filing Bankruptcy
You might have heard that bankruptcy cannot stop legal action against you. This is false because bankruptcy has a provision known as an automatic stay. One of the most potent elements of seeking bankruptcy is that an automatic stay takes effect. The automatic stay will stop all forms of creditors' recovery actions against you. You won't continue receiving threatening phone calls from creditors.
You will also be free from lawsuits, repossessions, garnishments, and foreclosure. This legal protection will last for the entire duration of your case. Therefore, no one should lie to you that bankruptcy cannot stop legal actions or collection actions against you. You should apply for bankruptcy if you are straining to pay your loans and you have started receiving notices from your creditors.
My Spouse Must File Bankruptcy Alongside Me
No law outlines that a married couple or spouses have to apply for bankruptcy together. It might be sensible for spouses to file jointly if they have signed for unmanageable debts and are therefore liable. If one spouse seeks bankruptcy, the other spouse will still be affected by the co-signed loans. In this case, filing bankruptcy together, commonly called joint filing, may be appropriate.
However, if one partner is unwilling to file, it doesn't mean that the other spouse cannot file alone. It might save the couple some money if they file one bankruptcy case instead of filing different cases. Filing together saves on both the court and attorney fees. However, joint filing may be complicated if the couple is divorced or if the spouses can't agree.
Filing Bankruptcy is Intimidating and Stressful
Perhaps you shy away from bankruptcy because you have heard that bankruptcy is stressful and intimidating. However, with an expert Laguna Niguel bankruptcy attorney, the process is neither stressful nor intimidating. All you need is to be armed with all the necessary facts, and the process will be both calm and peaceful. With bankruptcy, you get an opportunity to shed off all your debts and rebuild your credit score. This relief offers an unmatched peace of mind. You will start afresh by paying your debts on time, saving money, and reducing the levels of stress you or your family has endured. Therefore, bankruptcy is not a problem but a solution.
I Can't File Bankruptcy More than Once
This is not true. You can still apply for bankruptcy even if you have filed before. How soon you can file will depend on the bankruptcy chapter you intend to file and the previous case's outcome. At times, you can even file bankruptcy immediately after the previous filing or eight years after the last filing.
Many creditors will do anything or tell you anything to prevent you from seeking bankruptcy so that they can protect their investment. However, if you are armed with the truth, you won't believe any misleading information your creditor gives you. The bankruptcy codes seek to help good people going through hard financial times and not to punish them. A competent Laguna Niguel bankruptcy attorney understands everything about bankruptcy and will guide you accordingly.
I Have To Keep Certain Creditors Out of Bankruptcy
Another common myth is that you can apply for bankruptcy but leave certain creditors out of the process. This is a lie because you should list every person you owe money to when you declare bankruptcy. You should list every creditor whether or not you intend to pay them after bankruptcy relief. It doesn't mean that you can't pay some creditors voluntarily after bankruptcy. However, by declaring the creditors or disclosing them during filing, you will be under no obligation to repay them after bankruptcy.
You could choose under your free will to repay the creditors, but they can't coerce or harass you. A disclosure of all creditors during bankruptcy benefits the debtor. Leaving some creditors out of the bankruptcy process might put you at risk of defaulting the loans left out or not disclosed while filing. You might find yourself in the same position you were in before you filed for bankruptcy.
A Bankruptcy Filing is too Expensive
This is another common myth about bankruptcy filing. It might be less expensive to file for bankruptcy than not to file. Failure to file could lead to court cases when your creditors sue you. This might lead to a civil case and wage garnishment. A lawsuit could lead to liens on your property, and your bank accounts might be levied. At some point, you will have to face your debts that will have accumulated late fees and interests. By spending a small amount of money on filing bankruptcy, you can avoid higher costs in the future. You will avoid all the costs associated with late payments and lawsuits brought against you by creditors.
There is a Minimum Debt Amount for Bankruptcy Filing
Creditors might tell you that you must meet a certain minimum debt amount before you file bankruptcy. This is a lie. You do not need to have a particular debt amount to file bankruptcy. You should file as long as you feel the need to, irrespective of your debt amount. Even if your debt seems small, you should consult a bankruptcy attorney to know whether bankruptcy is the right option for you. You should not compare yourself to others. What may seem like manageable debt to one person might be stressful to another. Therefore, you shouldn't solely focus on your debt amount when planning to file.
Repay Your Relatives Before Bankruptcy
If you decide to declare bankruptcy, you don't have to prioritize or repay some debts before initiating the process. Paying some debts and declaring bankruptcy is illegal. The bankruptcy trustee has the mandate to recover the money from your relative and repay other creditors. You should never treat one creditor better than another. In the court's eyes, if you can't afford to repay your credit card debt, you shouldn't also be repaying your cousin or another relative.
Find a Bankruptcy Attorney Near Me
The bankruptcy process in California is complicated, and the many false myths about bankruptcy make the process even more confusing. You shouldn't listen to what your creditors say about bankruptcy. It's best to consult a qualified attorney who has your interest at heart. For the best counsel and guidance on bankruptcy, contact the Los Angeles Bankruptcy Attorney. Call us at 424-285-5525 and speak to our bankruptcy attorneys.