Bankruptcy Myths revisited (part 2)

Myth #5: If I File It Will Be Harder to Get or Keep a Job 

The good news is that there are strict rules in the Code that prevent this type of discrimination.  Just like it’s illegal not to hire someone based on race or religion it is also illegal to discriminate against someone in the hiring process based on a past Bankruptcy filing.  I deal with this issue and many similar issues in greater detail in the section of my book entitled “It’s Not as Bad as You Think.” 

Myth #6: You can’t Get Rid of Medical or Tax Debts?

In general most types of debt are dischargeable, meaning that you can get rid of them.  There are virtually no exceptions to this rule that result in preventing a person from discharging medical bills or medical debts.  Taxes are a bit trickier for sure but also can be discharged in the right circumstances.  This topic will be more fully dealt with in the section of my book entitled “What’s a Discharge and How does it Work?” 

Myth #7: I Should Max Out My Credit Cards Because When I File I Won’t Have to Pay Anyway 

Not so fast…This one is a big no-no.  Don’t do it, its fraud, its stealing and it just ain't right.  Seriously if you cards are maxed already ok we can deal with that, but don’t ever charge something or borrow some money with the intent not to pay it back.  It really wouldn’t be right but on top of that it’s criminal.  Not to mention the fact that you won’t get away with it anyway.  There are strict rules that prevent this type of behavior.  We will cover this and couple of other things you should avoid in the section of my book entitled “What can go Wrong and How to Avoid it.” 

For more information buy the book. 

Bankruptcy Myths revisited (part one)

In my book I cover a number of common misunderstandings about bankruptcy.  Below I go into some of the most common misunderstandings about bankruptcy.

Myth #1: Only Losers File for Bankruptcy

This is perhaps the biggest myth and is probably the most common belief among the general public.  The reality is that millions of people file every year.  Many of these people are doctors and lawyers.  Many of these people are normal regular hardworking individuals.  In many cases a person is forced to file due to things completely out of their control. 

Myth #2: People Who File for Bankruptcy Lose Everything They Have

Almost every day in my practice I heard somebody say “I really don’t want to file because I need my car to get back and forth to work,” or “I need your help but I can file Bankruptcy because I can afford to lose my home, it would devastate my children.”  

The good news is that you don’t have to lose your house, cars, furniture, collectables, photo albums, jewelry, or even you dog.  In most cases, my clients have been able keep everything.  Obviously there are limits to what a person can keep in Bankruptcy, but for most people these limits are quite generous.  I cover this in much more detail in my book, "Should I File: A Definitive Guide to Bankruptcy," in the section entitled “What Can I Keep?”  

Myth #3: If I File My Credit Will Be Destroyed Forever 

Most people believe this one.  My experience is that many attorneys even believe this one.  However it is simply not true.  First of all, the Fair Credit Reporting Act specifically limits the timeframe in which a Bankruptcy appears on your credit report to ten years.  This means that ten years and one day after your discharge the Bankruptcy will have no more effect on your credit.  The good news is that there is no need to wait that long.  Many people whom I have worked with have gotten credit cards and even mortgages with a year or less after filing for Bankruptcy.  How this works and what you should do to rebuild your credit is covered in detail in my book in the section entitled, “OK I filed, What do I do Now?”

Myth #4: If I File All My Friends Will Find Out

For some reason this myth just will not go away.  Lots and lots of people whom I have dealt with have expressed fear and anxiety over people finding out that they filed.  And while we will deal with this issue in much greater detail a little later on, I think it is important for you to know that in many case in fact in most case the only people that ever find out about your bankruptcy are those people you told about it.  In fact it is very likely that someone you work with or a close friend of yours has filed and you don’t know about it.  If they can get away with it so can you.  This myth is covered more fully in my book in the section entitled “Everyone is Doing it Maybe You Should Too”

I hope that you enjoyed this preview of my book.  I will be posting more myths in a few days.  If cant wait these myths and many more are covered in my book.  for more information about my book click below.

Multiple Filings in Bankruptcy

Hopefully those of you who have filed for Bankruptcy will not find yourself in the position where you need to file a second or third time but unfortunately it does happen and it happens more often than you may think.  Sometimes its a result of poor planning but more often than not its a function of reality.  Bad stuff happens and people with less resources are more likely to be unable to weather the storm.

Technically speaking there is no minimum time frame between bankruptcies.  However there are limitations regarding the usefulness of filing.  The end goal of most bankruptcies is a discharge of the legal obligation to pay one's debts.  Unfortunately if you file to soon you run the risk of not being able receive the discharge you desire.  

I will summarize the rules here for your benefit but keep in mind that some issues (and this is one of them) are best answered by an Attorney.  The best thing you can do is make sure you hire a good attorney who can look at you individual situation and determine the best course of action for you.  In order to find the right attorney for you it is important that you develop a general understanding of the law so that you can assure you have a knowledgeable attorney in the field.  For more info on this check out my book by clicking here.  Or you can buy it on Amazon.com 

General Guidelines are as follows

Successive Chapter 7 cases need to 8 years apart

Successive Chapter 13 cases need to be at least 2 years apart

It is more complicated if you change Chapters (ie file one of each)

After a 13 in which you recieved a discharge you need to wait at least 6 years to file a 7 unless you either 

1) paid all creditors in full in the 13 or

2) you paid at leas 70% and it was you best efforts and in good faith

If you filed 7 first then you need to wait at least 4 years to file the 13

As I said it can be complicated so check out my Book and get a good attorney.

Can I file again?

Hopefully those of you who have filed for Bankruptcy will not find yourself in the position where you need to file a second or third time but unfortunately it does happen and it happens more often than you may think.  Sometimes its a result of poor planning but more often than not its a function of reality.  Bad stuff happens and people with less resources are more likely to be unable to weather the storm.

Technically speaking there is no minimum time frame between bankruptcies.  However there are limitations regarding the usefulness of filing.  The end goal of most bankruptcies is a discharge of the legal obligation to pay one's debts.  Unfortunately if you file to soon you run the risk of not being able receive the discharge you desire.  

I will summarize the rules here for your benefit but keep in mind that some issues (and this is one of them) are best answered by an Attorney.  The best thing you can do is make sure you hire a good attorney who can look at you individual situation and determine the best course of action for you.  In order to find the right attorney for you it is important that you develop a general understanding of the law so that you can assure you have a knowledgeable attorney in the field.  For more info on this check out my book by clicking here.  Or you can buy it on Amazon.com 

General Guidelines are as follows

Successive Chapter 7 cases need to 8 years apart

Successive Chapter 13 cases need to be at least 2 years apart

It is more complicated if you change Chapters (ie file one of each)

After a 13 in which you recieved a discharge you need to wait at least 6 years to file a 7 unless you either 

1) paid all creditors in full in the 13 or

2) you paid at leas 70% and it was you best efforts and in good faith

If you filed 7 first then you need to wait at least 4 years to file the 13

As I said it can be complicated so check out my Book and get a good attorney. 

Inherited IRA funds

OK so I am a bit late to post on this issue but late is better than never I guess.  United States Supreme Court in Clark v. Rameker just held that IRA funds inherited by a debtor do not fall with in the retirement account exemption.  Their reasoning which strikes us as entirely reasonable is that funds in an inherited IRA are immediately accessible without penalty to the owner and as such are not really retirement funds at all but instead a potential source of capital currently available to repay debts.  

As always dont forget to check out the book.  

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Super sale on Book

Just a reminder the electronic version of the book is on sale for 99 cents at Amazon currently.  And also keep in mind that physical book can be bought for under 10 bucks.






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Post Bankruptcy Mortgages

One issue that many people worry about when considering filing for Bankruptcy is their future ability to purchase a house.  This a legitimate although perhaps premature concern in general we believe that Bankruptcy is a last resort so the future consequences to ones ability to borrow are not particularly relevant.  Arguably they are only relevant if a person can afford not to file in order to avoid them which of course means the person probably shouldn't be filing in the first place. I digress...

The good news is that in many cases a person can get a new mortgage as quickly as 2 years after filing a chapter 7 bankruptcy.  This period applies to FHA loans when the borrower didnt experience a foreclosure. If there has been a foreclosure than the period is increased to 3 years following the foreclosure date.

The periods for conventional loans are longer and start at a 4 year period.  I know of at least a few banks that make a borrower wait as long as 7 years.

At any rate if you file it doesn't have to be the end of your financial life it should be considered a new beginning for you.  You will have to rebuild but you can do it.  For more information on this topic be sure to check out the book.  The kindle edition is only 99 cents and you can buy a printed edition for less than 10 bucks!

                                                             






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