Common Bankruptcy Myths
Chicago Area Bankruptcy Attorney
1) Myth: You can’t file bankruptcy under the new law.
While the “new” 2005 law put some hurdles in the way of filling for bankruptcy, filing is just as possible as it was before.
2) Myth: You will lose all your property.
Certain assets are exempt from liquidation in a Chapter 7 bankruptcy, and a Chapter 13 bankruptcy does not result in a loss of your assets at all. Exemptions under Illinois law provide for assets that the debtor can keep and some assets, like pensions, are beyond the reach of bankruptcy trustees and creditors. When you contact the Law Offices of Paul T. Marinoff, Ltd., an attorney can advise you how this will work in your case, and what property is exempt under Illinois law.
3) Myth: You can’t work and file bankruptcy.
Having a regular and steady income is a requirejmen to file for Chapter 13. To qualify for Chapter 7 bankruptcy, a debtor must past the new “means test”. The means test is comparing the debtor's average income for the past six months to the median income for households of the same size in the debtor's state of residence. If the debtor's income is less than or equal to the state median income, the debtor "passes" the means test and may file Chapter 7, which is the case for the vast majority of bankrucpty debtors under Chapter 7.
4) Myth: If I file for bankruptcy, I will not be able to get credit for 10 years.
While it is true that the fact that you filed bankruptcy stays on your credit report for 10 years, filing for bankruptcy will not prevent you from getting new credit. The negative consequences of filing for bankruptcy will impact your ability to obtain credit immediately after a bankruptcy filing when you can expect credit to be more expensive and limited in amount. However, your bankruptcy filing becomes less significant the more time elapses.
5) Myth: If I file for bankruptcy, I will never have good credit again.
Unfortunately, if you are considering filing for bankruptcy, in all likelihood your credit is already seriously damaged. Further, filing for bankruptcy will actually improve your credit score because the filing individual's debt-to-income ratio has gone to zero after filing. Usually, having a steady income and paying all bills on time will help you reestablish your credit in 2-3 years after filing.
6) Myth: If you are married, both spouses must file bankruptcy.
If you are married, it is not required by law that you both file for bankruptcy. However, It is important that your attorney consider the specifics of your situation to determine whether joint filing will be more beneficial for your financial future.
7) Myth: Even after you file for bankruptcy, creditors can still contact and harass you for the money you owe.
False. The filing of a bankruptcy case, under any chapter of the Bankruptcy Code, triggers an” automatic stay ” order prohibiting creditors from contacting you to collect on the money you owe.
If you are considering filing for bankruptcy, contact Law Offices of Paul T. Marinoff, Ltd. for a consultation today.