Common Bankruptcy Myths…Debunked

Common Bankruptcy law

Myth: Bankruptcy relief is no longer available under the new law

This is just silly. The law wouldn’t be there if it didn’t serve a purpose. Almost all of the relief formerly available through bankruptcy survives in today’s bankruptcy code. It is a little more involved and may be more expensive, but it is still the quickest and single most effective way to make a fresh financial start.

Myth: You can’t file bankruptcy if you have a job

The new “means test” is supposed to divert some filers who make more than the median income for households of their size in their state of residence to Chapter 13. The only way to fund a Chapter 13 plan is to HAVE a job so this is just ridiculous.

Myth: Medical bills and credit cards can’t be discharged in bankruptcy

Rubbish. Debt collectors are known to push this mis-information on the unsuspecting consumer. The truth is that almost all unsecured contract debt, like credit cards, personal loans, and medical bills, remain dischargeable in bankruptcy.

Common Bankruptcy law

Myth: Chapter 13 plans require repayment in full of debt

Chapter 13 plans range from plans that pay general unsecured creditors nothing to plans that pay 100%, with every variation calculable in between. How much you must pay in 13 is driven by the ratio between your disposable income, the value of your non-exempt assets, and the total of priority debts you have.

Myth: People who file bankruptcy can’t get credit for 10 years

This is nonsense. People in a Chapter 13 bankruptcy can borrow money during the case and people who’ve filed Chapter 7 get inundated with credit card offers after they get their discharge. While this is not credit at the best rates, it is available nonetheless. This myth probably got its start in the fact that the Fair Credit Reporting Act allows the reporting of a bankruptcy filing for 10 years.

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Stacking the Deck in Your Favor

Law

1. File First. The spouse that files first controls much of how the agenda of the case is prescribed. The party that files the complaint is the one that can present evidence first and who has the opportunity to file for temporary orders. In doing so, the spouse that files first frequently has the first and last word before the court has a chance to rule.

If you have been served with a complaint for divorce, it’s not the end of the world. Retaining quality counsel can outweigh these factors. In addition, the responding party can have the final word, if the filing party elects not to ask the court for an opportunity for a rebuttal.

2. Watch all Joint Bank Accounts and Credit Cards. The last thing you want to have happen is to have your spouse clean out the accounts and rack up credit card debt when you turn your back or let your guard down. Chances are, if your getting divorced, you’ve already started to think about it months in advance so keep this issue in mind when you develop your strategy.

3. Do Not Contact Your Ex. It is recommended that you not contact your ex (especially if relations are poor) once the complaint or petition for divorce has been filed. If your ex should attempt to harass, humiliate, coerce or threaten you after the proceedings have begun, call your lawyer right away. She will likely be able to obtain a restraining order which can prohibit the other party from contacting you.

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