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Bankruptcy

Requirements to file for bankruptcy

  • Have not used credit cards for the last 6 months or opened new credit card accounts.
  • Bank Statements for the last 6 months
  • Taxes for the past 2 years
  • Check Stubs for the last 6 months
  • Credit report by the three agencies
  • Social Security Card and driver's license or identification

Common Concerns and Myths

Under the new bankruptcy law, there's no more bankruptcy (or it's too late to file)

Not True. In fact - nothing could be further from the truth. Sure you heard it in the press, but it's just not true. The news media overcooked the whole story. The truth is that you can do almost everything under the NEW law that you could do under the OLD law. In some ways, the new law actually increased the benefits of filing bankruptcy.

Everyone will know I have filed for bankruptcy

Unless you're a prominent person or a major corporation and the filing is picked up by the media, the chances are very good that the only people who will know about a filing are your creditors and the people who you tell. While it's true that your bankruptcy is a matter of public record, the number of filings is so massive, that unless someone is specifically trying to track down information on you, there is almost no likelihood that anyone will even know you filed.

I will lose everything I own

For whatever reason, people think that if they file bankruptcy they will lose everything that they have. Nothing could be further from the truth. Most of our clients keep everything they own, and lose nothing. Why? Because there are these things called "exemptions".

Using California as an example, there are exemptions to cover lots of things including houses, mobile homes, land, cars, trucks, household goods and furniture, wages, life insurance cash value, personal injury and worker's compensation claims, tools of trade, retirement plans, IRA's, and the list goes on.

Filing bankruptcy does not generally wipe out liens. Therefore, if you want to keep a car, truck, home or business equipment that serves as collateral for a loan - you need to keep paying on the debt. If you make these payments and have exemptions to cover any value above what is owed, you can rest assured you will be able to keep these items.

I'll never be able to own anything again

A surprising number of people believe this, but it's completely false. In the future : you can buy, own and possess whatever you can afford.

I'll never have good credit again.

Quite the contrary. Filing bankruptcy gets rid of debt, and getting rid of debt puts you in a position to handle more credit, and this makes you look more attractive to would-be lenders. Unfortunately, it won't be long before you're getting credit card offers again. I say "unfortunately" because I don't want you to get right back in debt again. At first, the would-be lenders will want more money down and will want to charge you higher interest rates. However, over time, if you are careful, the quality of your credit will get better and better. Generally, if a client has not re-established good credit in 2 to 4 years, sufficient to buy a car or even a house, it's not because they filed bankruptcy. It's because something else has happened after the bankruptcy to hurt their credit.

Filing bankruptcy will hurt my credit for up to 10 years.

Not true. You are getting 2 completely different concepts confused with each other. You are getting the fact that bankruptcy is reported on your credit report for 10 years mixed up with the effect that reporting will have on your credit. Just because something is reported on your credit report does NOT necessarily mean it will have a negative effect on your credit standing.

First, let's get one thing out in the open. By the time you need to make an appointment to see a bankruptcy attorney your credit is already messed up or maxed out, or both. This being the case, you have no credit for bankruptcy to hurt.

Furthermore (as I mentioned above) in my experience, if you have not re-established good credit in 2 to 4 years after you file bankruptcy, most likely, it has nothing to do with the fact that you (once upon a time) filed bankruptcy, and it certainly has absolutely nothing to do with the fact that your credit history still shows an old bankruptcy.

If you're married, both you and your spouse have to file for bankruptcy

Not true. In many cases, where both husband and wife have a lot of debt, it makes sense and saves money for them to both file, but it is never a requirement under the law. We have many cases where only one spouse has filed. The good news is that generally, if it makes sense for both spouses to file together, they can both file for the price of one filing.

It's really hard to file for bankruptcy

No, it's not, at least not in the hands of an experienced bankruptcy attorney. In the hands of an experienced bankruptcy attorney, filing bankruptcy is easy. The decision to file may be hard, but once the decision is made, the filing part is easy.

Only deadbeats file for bankruptcy

Not true. Most of the people who file bankruptcy are good, honest, hard-working people - just like you and me - who file as a last resort, after months or years struggling to pay the bills that are left over from some life-changing experience, such as a divorce, the loss of a job, a failed business venture, a serious illness, or some family emergency or because they honestly and mistakenly fell into debt at a young age before they knew better.

Filing bankruptcy means I'm a bad person

Not at all. There's a reason over 1,000,000 Americans file bankruptcy each year, and it's not because they're bad people. Lots of good, honest, hard-working people fall on hard times. Let's face it : life can be brutal and sometimes the money's just not there. The bankruptcy laws were created with this in mind - to make sure you have a way, if needed, to get free from the burden of debt so that you and your family can have a chance at a "fresh start".

Even if I file for bankruptcy, creditors can still harass me and my family

This is simply not true. The minute you file bankruptcy, the Bankruptcy Court issues an order telling all of your creditors to leave you alone. No more phone calls. No more collection letters. No more lawsuits. No repossessions. No foreclosures. Nothing. This order has a name. It is called the "automatic stay" and it is issued pursuant to 11 United States Code, Section 362. The automatic stay prohibits you from any and all collections actions. After you file bankruptcy, the creditor is not even allowed to talk to you. In addition, the creditor must stop any collection attempts already started. The automatic stay is very powerful, and puts the full weight of the United States Courts to work for you, to make sure your creditors leave you alone. If a creditor violates the automatic stay, you have the right to bring the creditor before the Court for Contempt of Court, and to be compensated accordingly. Believe me, Bankruptcy Court Judges do not take kindly to creditors who ignore the automatic stay, and these Judges have been known to punish creditors severely. Very simply, once you file for bankruptcy, creditors must leave you alone or suffer the consequences.

If I file for bankruptcy, it will cause more family troubles and lead to divorce

I sincerely doubt it. Usually, it works just the opposite. Filing bankruptcy is not the problem. The problem is not being able to pay your bills. All good, honest, hard-working people feel a strong need to pay their bills, and not being able to do so causes them to feel tremendous stress. Unless you do something to relieve this stress, it can quickly build to the breaking point : the marriage breaking point. Bankruptcy is designed to get you out from under the burden of debt, to protect your property and to lower your stress level. If your experience is like that of other couples, you will find that filing bankruptcy, and lowering the stress level, can be a crucial first step in bringing the love and caring back into your relationship which, in turn, gives your marriage a fighting chance.

I can only file for bankruptcy once in my life

The truth is, you can only file for a Chapter 7 bankruptcy once every 8 years. After 8 years, if needed, you can file again. As for filing a case under Chapter 13 of the Bankruptcy Code, there is no such restriction. Hopefully, however, you will never need to file more than one bankruptcy.

I can pick and choose which debts and properties to list on my bankruptcy.

I'm sorry, but no. Doing so would be against the law. Under the law, when you file bankruptcy you have to list all your properties and all your debts. Most people want to leave out a debt because it is their intent to keep paying on it. The good news is that you can achieve the same goal even though you have to list the debt. If you want to keep paying on a debt, after bankruptcy, you can.

After bankruptcy, you can go back and pay anybody you want. In fact, after you file bankruptcy, there are some debts you have to keep paying on. For instance - if you have a car, truck or house loan, even though you list the debt in your bankruptcy, if you want to keep the car, truck or house, you have to keep paying on the debt. As long as you stay current on the loan, and keep the property properly insured, you are protected under the law and you get to keep the property.

If you have any other questions or would like a consultation, please don't hesitate to contact me. I look forward to working with you to solve your bankruptcy issues.