As experienced Minnesota Bankruptcy Attorneys, we hear a lot of misinformation and bankruptcy myths that people believe are true.
Here in no particular order are our top 10 bankruptcy myths.
1. You can’t file for bankruptcy if you have a job
You can’t file for bankruptcy if you have a job
Sounds plausible doesn’t it.
After all, if you’re working, surely you can pay your bills and debts as well as your rent, car payments and put food on the table
- You can file for bankruptcy if you have a job
Whether you automatically meet the Chapter 7 Means Test requirements due to:
- Your income level, or
- Your income and outgoings
You can have a job and still need to file for bankruptcy.
Remember: you need a job for Chapter 13 Bankruptcy, as it is a repayment plan.
2. Your medical bills can’t be discharged in bankruptcy
Your medical bills can’t be discharged in bankruptcy
Again, this seems likely, doesn’t it?
- Almost all unsecured debt can be discharged in bankruptcy, including:
- Credit card debt
- Personal loans
Remember: some debts can’t be discharged, and your bankruptcy attorney will explain these to you.
3. Your Chapter 13 Bankruptcy requires full debt payment
Chapter 13 bankruptcy requires full debt payment
If you’re paying a debt back, you’ve got to pay it all back, right?
- Chapter 13 repayments vary from nothing, to the full amount
The amount you will need to pay monthly to your creditors will be determined by:
- Your disposable income
- Your debts
- Your assets
Remember: your bankruptcy attorney will tell you everything you need to know.
4. You can’t get credit for up to 10 years
You can’t get credit for up to 10 years
Again, this is not true, it’s another of those bankruptcy myths.
- Filing for bankruptcy often improves your credit score quite quickly
This is because you’re addressing your financial situation, and making you less of a risk to lenders.
Want to know something else?
- Many clients are offered, and approved for, credit cards, even before their Chapter 7 Bankruptcy has been completed
Remember: this is at a relatively high interest rate, but credit is still available to those who have filed bankruptcy in Minnesota.
5. You lose everything you own
You lose everything you own
Again, it’s one of those bankruptcy myths.
There are dedicated bankruptcy exemptions in Minnesota and other states, which determine what you can keep when you file for bankruptcy
However, if you previously had an extravagant lifestyle, then you might lose your luxury items, such as:
- Your yacht
- Your garage full of cars
- Your private jet
Remember: the vast majority of people whole file bankruptcy in Minnesota are not likely to lose much at all.
6. You need to have a minimum level of debt
You need to have a minimum level of debt
What might seem like an enormous debt to you, might not to others, and so we advise everybody individually, based on their circumstances.
- There is no minimum debt level required to file for bankruptcy
If your income is low, or your outgoings are high, you could even automatically qualify for Chapter 7 Bankruptcy.
Remember: we’ll advise you on whether filing for bankruptcy is right for you.
7. You are a failure
You are a failure
- You are not a failure
You’re doing the right thing by getting help with your financial situation.
- Visit a doctor if you’re sick
- See a mechanic if your car doesn’t work
- Call a plumber if your home floods
So why not speak to a Minnesota bankruptcy attorney if you’re struggling financially?
What’s the difference?
Whilst bankruptcy may have been a taboo subject in the past, it’s becoming more mainstream, and nothing to be ashamed of, especially after the harsh economic environment faced by many ordinary people like you.
Filing for bankruptcy could be the best way to stop worrying about money, and how you’re going to afford to:
- Put food on the table for your children
- Buy gas so you can drive to work
- Pay your rent or mortgage
Remember: there’s no stigma attached to bankruptcy now.
8. You are irresponsible with money
You are irresponsible with money
Again it sounds obvious.
People think you’re living a lavish lifestyle, and paying for it on your credit cards, and that’w why you’re considering filing bankruptcy.
However, we know are many reasons why people file for bankruptcy.
- We don’t see clients who have gone wild with their credit cards on designer shoes, super cars or luxury vacations
Our clients are regular people who often through no fault of their own have bills they can’t afford to pay.
Our typical clients are people who have experienced a significant life-changing event, such as:
- Losing their job
- Getting divorced
- Having a long term medical condition
There’s nothing glamorous about these situations.
Remember: even rich and successful celebrities go bankrupt.
9. You’ll lose your home
You’ll lose your home
- You won’t necessarily lose your home, depending on the value of it
Our experienced Minnesota bankruptcy attorneys know the law inside and out, and will be able to to tell you what will happen to your home, whether you want to keep it or want to give it back.
Again, you bankruptcy lawyer will be able to advise you on the best course of action regarding your home.
Remember: there’s a list of exemptions, and your home may well be included in that.
10. You can cheat on your application
You can cheat on your application
You may want to lie about your assets on your form, but you can’t.
- This would be committing bankruptcy fraud, which is:
- Investigated by the FBI
- Punished by up to 5 years in jail and a potential fine of up to $250,000
Still tempted to lie?
In addition, if you are found to have committed bankruptcy fraud, your bankruptcy will be dismissed, and these debts cannot be considered if you file for bankruptcy again.
Although you may be tempted to:
- Hide some of your possessions
- Give them to friends or family for safekeeping until your bankruptcy is complete
- Sell them at less than they are worth
We’ve never had any client investigated for, accused of, or convicted of bankruptcy fraud.
Remember: if you’re honest with your bankruptcy attorney, they’ll ensure that you keep what you are legally entitled to, so there’s no need to cheat.
If exposing these bankruptcy myths has encouraged you to look at your financial situation again, then why not speak to one of our experienced Minnesota Bankruptcy Attorney today?