Which of These Bankruptcy Myths Sounds Familiar?
Over our 30 years of bankruptcy practice, we’ve heard a lot of clients express a great deal of confusion about the bankruptcy process and how it works. After the 2005 Bankruptcy Code amendments, there seem to be even more misconceptions.
Contact an attorney at the law firm of Steven E. Mirsky, LLC, for a free consultation about your financial problems. You might find out that what you think you know about bankruptcy is just plain wrong.
Bankruptcy Myth 1: “Since they changed the law, bankruptcy’s no good anymore.” This is ridiculous. Except for the income requirements for Chapter 7 eligibility, very few people will even notice the difference between the new bankruptcy law and the old system. And for a lot of people, Chapter 13 works better than Chapter 7 anyway.
Bankruptcy Myth 2: “My gross salary is greater than the Maryland state median. I’ll have to file for Chapter 13.” Not so fast. Consumer Chapter 7 eligibility is based on net income after adjustment, not gross income. Some of our Chapter 7 clients gross more than $100,000, but still qualify. Besides, income is just one factor to consider in choosing between Chapter 7 and Chapter 13.
Bankruptcy Myth 3: “Filing for bankruptcy means I’m irresponsible.” Not too likely. The leading causes of bankruptcy are not poor money management, but instead include job loss, divorce, medical problems, or a combination of the three. More recently, rising mortgage payments in a falling real estate market have forced many people into bankruptcy.
Bankruptcy Myth 4: “Bankruptcy will ruin my credit.” Nonsense. Chances are that your credit will never be worse than it is right now. For most people, bankruptcy is a first step toward rebuilding credit much faster than would be possible without bankruptcy.
Bankruptcy Myth 5: “You can’t discharge taxes in bankruptcy.” Part myth. Taxes that have been “assessed” within three years are not dischargeable, but older taxes for which you’ve filed returns or that have been in collection are subject to discharge.
These are just a few of the misconceptions about bankruptcy that have been floating around for years. To see whether you’ve fallen for any of the bankruptcy myths, contact a lawyer at the offices of Steven E. Mirsky, LLC, in Rockville, Frederick or Laurel.
