Most people do not have much information about how the bankruptcy process works. They fear that they will lose all or some of their assets. By discussing the top myths about the bankruptcy process I hope I can help you consider whether bankruptcy may be right for you. The initial consultation with your Maryland Bankruptcy attorney is free.
Myth One: If I file for bankruptcy, I will lose my house, my car and all my property.
Exemptions provided by the bankruptcy code allow most people to keep their car and their house and their household property. Those that have substantial equity in their car or house can keep those assets if they repay some of their debt in Chapter 13. Talk to your Maryland Bankruptcy attorney about what chapter is right for you.
Myth Two: My bankruptcy will hurt my spouse's credit.
Although the means test requires that both spouses incomes be included in the means test calculation, one spouse's bankruptcy filing will generally not affect the other's credit.
Myth Three: Only deadbeats file bankruptcy.
Many reasons exist for filing bankruptcy, including overwhelming medical and credit card debt. In this economy many clients report that they have reduced or lost income, which has not been within their control. In addition, many people have mortgages they can no longer afford, bankruptcy is an option for you. The banks make a financial decision to foreclose on homes and raise credit card rates. You are in the position to consider if bankruptcy is a financial option for you to start over and make a fresh start. Chapter 7 or Chapter 13 may be right for you. Congress created the bankruptcy laws for everyone who honestly has tried to repay their debts and is unable to repay their debt for one reason or another.
Myth Four: Bankruptcy is too difficult for me.
Your Maryland Bankruptcy attorney is there is help you navigate the bankruptcy process and make the process go smoothly for you. There are many rules and documents you will need to provide to your Maryland Bankruptcy attorney prior to filing bankruptcy. However, the process is not so difficult that you should not get a free consultation to learn the benefits of a fresh start from overwhelming debt. Talk to your attorney about the bankruptcy timeline. For most people the process is straight forward and you can begin your fresh start in a few months.
Myth Five: If I file, I will never get credit again. I will be unable to buy a house in the future.
You will have opportunities to rebuild your credit immediately after filing bankruptcy. Many clients receive opportunities for new credit within a year or two of filing bankruptcy. If you live in Baltimore County, Prince George's County, Frederick County or Montgomery County, you will likely have an easier time receiving new credit after completing your bankruptcy because you have eliminated much of your debt.
Myth Six: If I file, I will lose my retirement plan.
Pension, retirement plans and IRA's are fully exempt in Maryland. In Maryland, these assets are exempt. You will keep your retirement funds.
Myth Seven: Bankruptcy will not help me because I owe income taxes.
Some income taxes are dischargeable or can be repaid without interest in a Chapter 13 plan. In chapter 7 you may be able to eliminate some income tax debt if it is over 3 years old and if you meet other rules for eliminating tax debt. Consult your Maryland Bankruptcy attorney to discuss if you are eligible to discharge tax debt.
Myth Eight: If I file, I may lose my job.
Federal employers are prohibited from firing an employee for filing bankruptcy. In most instances, your employer (whether in private or public sector) will not find out about the bankruptcy filing. Clients who have security clearances have filed bankruptcy and renewed their security clearances.
Myth Nine: Bankruptcy will not allow me to continue to pay my auto loan.
Generally, most people can continue to pay your auto loan after bankruptcy. Discuss the effect of reaffirmation agreements with your Maryland Bankruptcy attorney or whether you should simply continue to repay your auto loan on a regular basis. If you live in Montgomery County, Prince George's County, Baltimore or Frederick County most clients will keep their auto and their auto loans after bankruptcy.
Myth Ten: Filing bankruptcy will take too long.
Most bankruptcy filings take 4 to six months to complete. Talk to your attorney about the
bankruptcy timeline
. Once the bankruptcy is filed an automatic stay is in place which stops creditor calls and further collection efforts. Most clients report that they are relieved from their debt and happier after filing bankruptcy. Talk to a
Maryland Bankruptcy attorney
to discuss whether bankruptcy may be right for you.
Jillian K. Aylward
The Aylward Law Firm LLC