Michigan Bankruptcy Myths
- Myth #1: Congress has eliminated bankruptcy for the “little guy.”
- Myth #2: A debt counseling service can help me eliminate my debts without the stigma of bankruptcy on my record.
- Myth #3: If I file for bankruptcy, I will lose my house and car.
- Myth #4: If I file for bankruptcy, I will never again be able to buy a house or a car.
- Myth #5: Bankruptcy will ruin my credit record.
- Myth #6: I won’t ever be able to get credit after my bankruptcy.
- Myth #7: My spouse is automatically liable for my debt.
- Myth #8: My name is going to be in the newspaper.
- Myth #9: Only losers file bankruptcy.
- Myth #10: Filing bankruptcy makes me a bad person.
Fact: Despite what you may have heard in the press, bankruptcy is still alive and well and available to the little guy—and girl. Yes, in October 2005, new bankruptcy reform laws went into effect that may make it more difficult for some individuals to qualify for Chapter 7 relief. However, consumers in serious financial trouble should still be able to qualify for protection under the Bankruptcy Code. The sky has not fallen on bankruptcy!
Fact: This myth is a very dangerous one. Debt counselors cannot get rid of your debts, nor can they stop your creditors from harassing you. All debt counselors do is help you negotiate new terms on your existing debt with your creditors-your creditors do not have to agree to any restructuring, and they can still come after you for any unpaid balances. By contrast, the moment you file your bankruptcy case, many of your creditors are prohibited by law from taking any legal actions against you, and once your bankruptcy is complete, many of your debts are gone forever. Furthermore, credit counselors do not necessarily have your best interests in mind-they are often owned by the very creditors that are making your life miserable to begin with. Don’t let their non-profit claims fool you-when you use a debt counselor, someone is making a lot of profit off you, and in most cases you’ll still be hopelessly in debt.
Fact: Not true. Bankruptcy is not designed to punish or embarrass a person by having their house and car sold. You actually get to exempt a certain amount of your personal belongings. And you get to control how you use your built-in exemptions. You can keep things like your wedding ring, family jewelry, or your favorite items out of the bankruptcy process entirely. In your free consultation, we’ll help you see exactly what you can exempt and how.
Fact: Not true. It usually takes about two years to get a house after you file Bankruptcy and it’s even less of a waiting period for new car and credit card offers.
Fact: This is absolutely false. What ruins your credit record is your inability to pay your debts on time. After your bankruptcy case, many of your debts will be discharged, and you will be given a fresh start. If you can keep on top of any new debts you incur after you emerge from bankruptcy, your credit record should actually improve.
Fact: False. Think about it; if you owned a credit card company, who would you rather give a credit card to: someone who has a massive debt load and is behind on all their bills, or someone whose bills have been wiped out? Probably the latter, right? That’s why you should be able to get credit after bankruptcy. Since many of your debts will be wiped out after bankruptcy, and, in the case of a Chapter 7, you won’t be able to file another one for another eight years, many creditors will see you as a good credit risk after your bankruptcy.
Fact: Depending on your individual situation, your spouse is not always held liable for your debt. During your first meeting with me, we can discuss this specific matter further and determine how filing bankruptcy affects both you and your spouse.
Fact: Not true. Your name will not be in the newspaper. There is no public, publishing requirement for bankruptcy. At Moran Law Offices, we handle all bankruptcies with a very high level of confidentiality. No one has to know that you have chosen to seek relief from your debts through bankruptcy. Many of your friends, neighbors, and coworkers may also have filed bankruptcy without you even knowing.
Fact: Incorrect. People file bankruptcy every day, even notable people who go on to much success afterwards. Larry King, Walt Disney and even Donald Trump have all filed for bankruptcy during their lives. Read our famous fresh starts page to learn more about people just like you, who have used bankruptcy to get back on their feet!
Fact: Absolutely not! Congress passed the bankruptcy laws to help individuals and businesses with severe financial problems get a fresh financial start and become productive members of society again. Do you think it makes you a better person to avoid your creditors, ignore your bills, and drive yourself further into a debt hole that you’ll never get out of, or to take on new credit responsibly, and pay your bills on time? Millions of businesses and individuals file for bankruptcy each year and come out stronger and more successful. You can too!