Popular misconceptions about bankruptcy, keep many people from seeking the help they need often at the detriment to their health and relationships with others. Knowing the advantages and disadvantages of filing for bankruptcy can save much heartache and stress. For many clients, the decision to file for bankruptcy is an easy choice once they learn the truth about bankruptcy.
People often believe that bankruptcy should always be considered as a “last resort” but this advice proves time and time again to be oversimplified. Many rights can be lost by delaying a bankruptcy case especially for families facing an imminent foreclosure or repossession. A bankruptcy can stop a foreclosure, repossession, wage garnishment and other collection efforts by creditors and debt collectors. Once a bankruptcy petition is filed all collection tactics must stop, including the harassing phone calls and any further actions taken by creditors to collect the debt is a violation of federal law subjecting these parties to harsh penalties.
Many consumers are reluctant to file for bankruptcy even when they know that they have no other realistic means of paying off their debts. They feel that there is a stigma attached to bankruptcy or they believe that their employers or acquaintances will find out about their financial situation. The truth is, however, that more than a million people per year file for bankruptcy, it is illegal for an employer to discriminate against you because of a bankruptcy, and most of your acquaintances would never know about a bankruptcy filing unless you chose to tell them about it. Many clients also believe that a bankruptcy will destroy their credit and prevent them from ever obtaining credit cards or purchasing a home. Once again, the truth is that if you are going through a foreclosure or are delinquent in paying your obligations your credit has already suffered and a bankruptcy is not going to have much more of an impact. A bankruptcy gives you a “fresh start” by wiping the slate clean through the elimination of debt and allows you to start rebuilding your credit immediately. Many of our clients are able to have credit cards in months and even purchase a home within two years. In fact, most people go through a bankruptcy without losing any property at all and their lives look the same as before their bankruptcy except that they are no longer drowning from debt and are living again instead of merely surviving. And, although the bankruptcy laws are complex, most consumer bankruptcies are straightforward and are over in as little as three months. Typically, the client is only required to go to one formal hearing that lasts 5-10 minutes and is conducted by a Trustee, not a judge, in an office in close to the courthouse.
Bankruptcy does indeed have its advantages for people who truly need it but it is definitely not for everyone. The purpose of this article is not to persuade those who can pay their debts to shrug off that responsibility and simply file for bankruptcy. This article is intended to help alleviate the fears of those who need help and who are not seeking the help they need. If you are considering bankruptcy, you must also be aware that certain debts are not eliminated through bankruptcy including most taxes, student loans (unless there is a hardship), and domestic support obligations such as alimony and child support. However, even with these types of debts it may be possible to pay these obligations over an extended period of time.
Lastly, Chapter 13 bankruptcies are on the rise again due to the rapid increase in mortgage foreclosures taking place across the nation. This type of bankruptcy is often the strongest weapon that a family has to fend off a foreclosure and to make sure the home is not sold at auction. In a Chapter 13, it is possible to cure delinquent mortgage payments by spreading them out over three to five years. For example, a homeowner who owes $7,000 in arrears can cure the default by paying around $195 per month in addition to their regular monthly mortgage payment. The filing of a bankruptcy petition stops the sale and prevents the foreclosure from going forward in most cases. This protection against a foreclosure or repossession is just one of the many ways the power of the courts can aid those in need of relief.
The crisis in the mortgage industry and real estate markets have lead to an unusually high number of calls to our office from people confused about their legal rights. Our attorneys can assist you in negotiating with your lender, obtaining a mortgage workout, as well as filing for bankruptcy should it become necessary. Let our experience work for you.
Contact our Florida bankruptcy lawyers for more information about consumer bankruptcy and other debt relief options. We offer free and confidential consultations as well as evening and weekend appointments for your convenience.