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Bankruptcy Myths

Many misconceptions surround bankruptcy that can effect one’s decision as to whether or not he or she should file for bankruptcy protection. When considering bankruptcy, it is best to obtain advice from a professional bankruptcy attorney who has the legal expertise to answer all your questions.

At Irons, we have the knowledge you will need to fully discuss your options when it comes to dealing with your debt and finding determining if bankruptcy is the right choice for you. There are common myths abounding, which we will answer for you briefly.

All my debts can be eliminated with bankruptcy.
Although you can discharge quite a few types of debt, certain ones such as child support, alimony, taxes and student loans are still owed and cannot be discharged through any type of bankruptcy.

What is Bankruptcy?
Bankruptcy is a federal court process designed to help consumers and businesses eliminate their debts or repay a portion of them under the protection of the bankruptcy court. Bankruptcy provides a “fresh start” that enables individuals or businesses to start over without the burden of debt. It also gives people who are owed money – the creditors – a fair share of the money that the debtors can afford to pay back.

How do I know if I qualify?
The question is not “Do I Qualify?” Instead, the question is “Do I Need to File?”
Everyone qualifies for some form of bankruptcy (chapter 7 or chapter 13). But not everyone needs to file bankruptcy. We find that we recommend filing bankruptcy to about fifty percent of the people with whom we meet.

The “New” bankruptcy law that was passed in October of 2005 was intended by Congress to make it more difficult for individuals to file bankruptcy. However, in our experience, about 95% of people who qualified for Chapter 7 bankruptcy before the new law was passed, still qualify for Chapter 7 bankruptcy. Those that no longer qualify for a Chapter 7 filing still qualify for Chapter 13 bankruptcy. The question of which bankruptcy chapter is right for you, of course, depends on many factors specific to your case and can only be answered after a full, free consultation with one of our experienced attorneys.
My credit will be ruined for 10 years.

Although a bankruptcy will appear on your credit history for 10 years, your credit rating will begin to improve as time goes by and you re-establish your credit. Your credit was probably already affected considerably if you had late payments or any wage garnishments or lawsuits.

Bankruptcy is hard to get through and qualify for.
When you have an experienced bankruptcy lawyer working with you, the most difficult part of the process is in deciding whether or not you wish to file for bankruptcy. Your attorney will help you in determining which filing is right for you and will take care of all the legal paperwork.

I will lose everything I own.
Most bankruptcies do not affect your ability to keep all of your assets. Many assets are protected by bankruptcy laws. In fact, the majority of people who file for bankruptcy give up none of their assets.

I will not be able to get credit again.
Not so. Although you will pay higher interest rates for a time, you may be able to start re-establishing your credit right away.

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Life After Bankruptcy
Getting past your bankruptcy filing and through to its finalization is a rewarding experience. Although a difficult thing to confront, once it is completed, your life can begin to improve. Once your bankruptcy has been finalized, your debts will either be discharged if you filed Chapter 7 protection, or you will be on a repayment plan on your Chapter 13. There will no longer be any harassing phone calls or pending lawsuits. You will either be free of your debts or on a solid payment plan. You can now begin to think about starting anew with a fresh financial outlook.

A bankruptcy filing will initially affect your credit record, so you can expect to have limited reasonable amount of credit and pay it off regularly, your credit history will slowly improve with time. As part of your bankruptcy you are required to attend a financial management class. It is wise to pay close attention and use the tools you learned to budget now that you have been able to eliminate your debts. By always spending less than you make and keeping track of your expenditures, you should be able to keep your finances in good order. Any new credit you do establish should be used as little as possible.

For advice and assistance following your bankruptcy, consult with your bankruptcy attorney for help with keeping your finances in order once your bankruptcy is finalized. With the experience and caring of the legal staff at Irons, you can count on us to answer any of your financial questions.