Searching for an attorney for bankruptcy in San Francisco?
California was hit hard by the Great Recession and in effect has led to job losses, extended periods of unemployment and foreclosures across the state. In many cases of insolvency, consumer debtors have had nowhere else to turn but to bankruptcy protection. Unfortunately, there are many who believe that filing for bankruptcy means that someone couldn’t resist the temptation of credit cards, but most people who file for bankruptcy usually do so for very different reasons. Here is a fresh look at some of the myths surrounding the consumer bankruptcy.
Myth: People file bankruptcy because of reckless spending.
While there are some instances of abuse, by far the majority of people who file for bankruptcy do so because of a job loss, a divorce, an accident or a serious illness. Extended periods of unemployment can drain a family’s savings, the legal fees and costs of running two households following a divorce, and the exorbitant costs of medical care can drive well-intentioned Americans into bankruptcy.
Myth: A Chapter 7 will erase all debts.
While a Chapter 7 is designed to discharge unsecured debts such as medical bills, personal loans and credit card debt, it doesn’t discharge all debt. Debts such as alimony, child support, most taxes, court-ordered fines, and debts incurred as a result of fraud, and victim restitution cannot be discharged in a bankruptcy.
Myth: You will never get a credit card again.
People are often surprised at how quickly they begin getting credit card offers in the mail following a bankruptcy discharge. It’s a good idea to comparison shop the various credit cards online so you can get the best deal. While your initial credit cards will have low credit lines and high interest rates, by charging a small amount every month and paying your credit card on time, you will slowly be able to rebuild your credit and your credit lines and interests rates will improve accordingly.
Myth: You can charge up your credit cards, file for bankruptcy, and won’t have to pay that money back.
A common mistake people make is they decide to file bankruptcy, but before filing they go out and max out all their credit cards falsely believing those debts will be discharged. The courts are aware of this practice and have ruled that such practices are fraud. Debt that is incurred as a result of fraud won’t be discharged. If a debtor charges a bunch of stuff shortly before filing for bankruptcy, they won’t usually get away with it and that’s a common misconception.
Myth: You will lose everything you own.
This is a misconception that keeps people from filing for bankruptcy that would benefit from doing so. While every state has different rules, each state has bankruptcy exemptions that allow a debtor to keep certain property such as their home, an automobile, and money in qualified retirement accounts, proceeds from a personal injury settlement, family heirlooms, jewelry, tools of the trade etc. In the majority of cases, people pass through bankruptcy keeping everything that they have. If you have a mortgage or an automobile loan, you may get to keep those as long as you keep up the payments just like the rest of us.
Contact Kostopoulos Bankruptcy Law
If you are thinking about bankruptcy, we urge you to contact Kostopoulos Bankruptcy Law to tell us your story. With over 8,000 bankruptcy clients served and with a certified bankruptcy specialist on your team, we are confident we can help you determine if bankruptcy is right for you.