It’s true that bankruptcy laws have changed in the last decade. It’s understandable that the average person hasn’t kept up on these changes but it’s important to know the truth. If you’re considering bankruptcy in California then you’ll want to read these common myths and learn the truth of the matter.
Myth: Bankruptcy is no longer an option
One of the most common myths out there is now is that bankruptcy isn’t an option anymore. This myth often stems from the significant bankruptcy law changes in 2005. It’s true that these changes made it more difficult for some to qualify for bankruptcy, but it is still very much an option. Are you curious if you qualify? Contact The Law Offices of Paul Y. Lee at 951-755-1000 today!
Myth: They’ll come to your house and take everything you own
In the vast majority of cases, no one will ever come to your home. They won’t inspect the value of your belongings. That’s because bankruptcy laws allow you to keep almost everything – as long as they aren’t luxury items. It’s your responsibility to list everything you own in your bankruptcy documents but that property will be exempt from liquidation. Even if you do have luxury items, you may be able to keep them as well. It all depends on your circumstances.
Myth: Declaring bankruptcy makes it impossible to qualify for a car loan
It’s true that your bankruptcy will have an effect on your ability to get a car loan but that effect is temporary. Lenders won’t finance the loan while you’re in the middle of your bankruptcy but once it’s gone through you’ll be able to find financing. For one thing, your income to debt ratio will be significantly improved!
Myth: The only people who declare bankruptcy are the unemployed and deadbeats
This myth is 100% false. Take former presidents Ulysses S. Grant and William McKinley, for example. They both declared bankruptcy, as have celebrities like Toni Braxton, Rush Limbaugh, Marvin Gaye, Wayne Newton, and Larry King.
You may be surprised to learn that most people are employed at the time of their bankruptcy filing. But, like you, they’re drowning in debt and are struggling to pay their bills. Their solution is to file bankruptcy. In fact, Chapter 13 bankruptcy requires the petitioner to have steady income.
Myth: Every debt is erased in a bankruptcy
Bankruptcy can be a solution that helps you immensely but it’s important to understand what it can and can’t do – and it won’t necessarily erase 100% of your debt. For example, in a Chapter 7 bankruptcy most of your debts will be eliminated, including medical bills, credit cards, and personal loans. However, there are some things that can’t be covered in bankruptcy. Most notably, student loans, child support, and certain types of taxes.
Are you interested in learning more about how bankruptcy could work in your situation? At The Law Offices of Paul Y. Lee we’re happy to offer you a free evaluation. We know you need help and we’re here to make the process as smooth as possible.
