“This is Steve Altmann of The Nomberg Law Firm. Today I want to talk about the seven common myths or misconceptions about filing for bankruptcy. There are thousands of people struggling right now with their finances. The overall feeling for many people is that the following bankruptcy, that there’s a negative stigma to filing for bankruptcy That’s just not the case today, as it was many, many years ago.
And, so the seven myths that I want to talk about… the first one is that bankruptcy will ruin your credit. For most people, their credit is already in disarray. It’s not where they want it to be. Whether they have medical bills or a credit card debt, they’re behind on payments already, and so if you’re in that type of situation, filing for bankruptcy is not going to ruin your credit. It actually gives you an opportunity to rebuild your credit and give you a clean slate to work from. So that’s the first misconception.
The second misconception is that everyone’s going to know that you filed for bankruptcy and that’s not true. It is a public record when you file for bankruptcy, but it’s not published in the newspapers everywhere And for someone to have to find out if you file they would have to go through the process of actually looking for that record. So unless you’re a business and it’s recorded in the local business journal, it’s not going to be accessible to many people
The third myth is that if you’re filing for bankruptcy, then your spouse must also file for bankruptcy. That is just not true. Certainly, if your spouse has the same debt as you, then it might be beneficial for you to file together. It’s more cost-effective to file together. There is nothing that says, or no rule that says because one spouse is filing that the other spouse must file with them. Your spouse might not have to file bankruptcy. Every situation is different. So that’s something that a lawyer, that you to talk to your bankruptcy lawyer about to determine the best alternative.
The fourth myth of bankruptcy is that you cannot bankrupt on taxes. There are income taxes that you can bankrupt on. There are certain rules that apply, and if the taxes are more than three years old, as long as you have filed all of your tax returns and timely manner, and depending on when the taxes were assessed, there are ways for you to bankrupt on income taxes.
The fifth misconception or myth of bankruptcy is that you’re going to lose all of your assets and property and bankruptcy. When you file a Chapter 7, you do have options to claim exemptions for personal property, some household items. You’ll also have the option for a homestead exemption possibly. So most of your assets are going to be exempted, so you would not lose those things. If you’re buying a vehicle, you’re usually giving an opportunity to reaffirm or keep the vehicle, and the same goes for your house. So losing assets is definitely not something that always happens in a bankruptcy.
The sixth misconception of bankruptcy is at its shameful – that so that you should be ashamed that you have to file bankruptcy. There are thousands of people that have to file every year. Most of the time it’s for reasons beyond their control. So I think it’s to the point today where if you have to file bankruptcy, the shame is not there maybe as it was many years ago.
The seventh myth of filing bankruptcy is that you have too much money in your 401k, and because you have too much money there saved that you can’t file for bankruptcy. The reality is you can, but you need to talk to your bankruptcy lawyer and have him review the facts with you about the origination of the 401K and the IRA that you have because retirement funds are exempt for the most part. There’s no reason why you couldn’t file bankruptcy even though you have maybe a substantial amount of money in your 401k. Those funds are for your retirement.
So those are the seven myths of bankruptcy. If you would like to discuss your alternatives about your finances, and maybe if you’re considering filing for bankruptcy, you can call me at 205-930-6900. Please stay tuned for our next set of videos. Thank you.”