Michigan Bankruptcy Myths

The first myth: “I have failed if I file for bankruptcy.”

Things happen in life that are uncontrollable. Medical emergencies happen, divorce happens, and even job losses happen. You need to take the time to recognize that there is a problem and find a path to get through scenarios like these. Bankruptcy is one of the best financial tools if it is used under the right circumstances. Financial freedom is what we should all strive for and you shouldn’t feel ashamed for using bankruptcy to get there.

The second myth: “It will ruin my ability to get another credit card.”

Quite the opposite is true. You will have creditors giving you offers who want to loan you money or sell you a car. By filing for bankruptcy, you are working on getting rid of your debt and you are a much better risk for lending. You can also use these offers to assist you in establishing a good credit history in the future.

The third myth: “I could lose everything if I file for bankruptcy.”

Bankruptcy is complex. There are many misconceptions that have been spread across the internet. Often, this scares the people who really should file for bankruptcy. In Michigan, there are laws on both the federal and state level that protect most of your property and assets up to a certain value. These things include your care, your home, money in specific retirement plans, household goods, and even your clothing. Most people get to keep everything that they have.

The fourth myth: “Maybe I don’t need to hire an attorney.”

You can lose your home if you don’t the bankruptcy process properly. Anytime you are involved in legal matters, it’s wise to hire an attorney – especially with complex processes like bankruptcy. If you have attempted to file on your own at first but have found that you are about to lose everything, please, reach out to us so that we can try to assist you.

The fifth myth: “I won’t be able to make big purchases such as a house or car.”

Most of our clients have been able to buy a car after filing for bankruptcy. We know of car dealers that specifically work with those who have filed for bankruptcy so that you have options. If you are generating enough income to afford a car or house payment, there are plenty of lenders that will help you. What you do after filing bankruptcy is what’s most important. It can take about two years to purchase a home again, depending on what steps you have completed rebuilding your credit score.

The sixth myth: “You will have to file for bankruptcy with your spouse if you are married.”

It varies from case to case whether you should file with your spouse or not. If the debt is primarily in your name, then there is no reason for your spouse to file with you, unless they co-signed on things. If the debt is joint debt, then it is best that both of you file. If only one of you files for bankruptcy, then the creditor can still attempt to collect the debt from your spouse. It will also save you money to file together rather than creating two separate cases.

The seventh myth: “Filing for bankruptcy will ruin my credit.”

If you have to file for bankruptcy, it is likely that your credit is already bad. You’ve likely already missed payments and have high credit limits that have created a poor credit score. Bankruptcy can help you improve your credit score though since you will be able to start with a clean slate and wipe most of your debt clean. Your score may be lower when you file at first, but you will typically see an improvement within six months of filing.

The eighth myth: “Your taxes cannot be discharged by filing for bankruptcy.”

That really depends on the situation. Sometimes tax debt can be discharged, but the requirements must be met for that to take place. We can evaluate your tax situation for you during your free initial consultation.

The ninth myth: “Filing for bankruptcy is complicated.”

It’s uncommon for people to consult with us and not be a candidate for bankruptcy. We can walk through each step with you along the way and determine if you qualify, and help you decide if it’s even the best option for you.

The tenth myth: “Any bankruptcy attorney can handle my case.”

The nature of bankruptcy is complex, so it is important to hire the right attorney who not only specializes in bankruptcy but is also a Certified Consumer Bankruptcy Specialist by the American Board of Certification. This certification is so important when choosing your bankruptcy attorney. We are proud to hold this certification standard and would love to help you through this process and take control of your debt.