I know you do not this information!! but it's "good to know" -- Bankruptcy Myths
McFerran & Burns, P.S.
Bankruptcy Myths
In the course of many years of bankruptcy practice, I’ve found there is a great deal of misinformation about bankruptcy among the general population. Here is a list of some common myths about bankruptcy
YOU MUST BE BEHIND IN YOUR BILLS OR BROKE TO FILE BANKRUPTCY
- No. Figure out where you will be financially 6 months from now. Will it be better or worse?
- Do not wait until there is a judgment, foreclosure or garnishment pending.
YOU CAN’T WORK AND FILE BANKRUPTCY
- No. Your income may determine what type of bankruptcy is available to you, but no amount of income on its own will disqualify you from some bankruptcy protection.
YOU WILL LOSE YOUR STUFF IF YOU FILE BANKRUPTCY
- No. Each state has different exemptions to allow you to keep your personal property and real estate.
- For example, in Washington unless your home is worth $125,000 more than the total of your mortgages, it can be protected.
IT WILL DESTROY YOUR CREDIT IF YOU FILE FOR BANKRUPTCY
- Let’s face it, most clients already have bad credit.
- After an initial fall in your credit score, it will start to go up after filing bankruptcy.
- The real question is what to do about your debt.
BANKRUPTCY WILL PREVENT YOU FROM GETTING A JOB, RENTING AN APARTMENT OR BUYING A HOME
- You have a better chance of landing that job if you take action to fix your finances.
- Employers do not want harassment at work or garnishments.
- Landlords want tenants who can use their salary to pay rent, not credit card debt.
- Under FHA guidelines, you may qualify for a home mortgage one year after bankruptcy.
IF YOU FILE BANKRUPTCY, MIGHT AS WELL MAX OUT CREDIT CARDS
- WRONG! Stop using the cards and stop paying them and see a bankruptcy professional.
- Maxing out those cards will create problems in your bankruptcy case. Charges made shortly before filing may be “nondischargeable” and payable despite the bankruptcy.
- Bankruptcy is meant for the UNFORTUNATE but HONEST debtor. Don’t try to game the system.
YOU SHOULD DO ANYTHING TO AVOID BANKRUPTCY INCLUDING CASHING IN 401K OR RETIREMENT FUNDS
- No. Your retirement funds are protected. Using exempt assets to pay debt you can discharge is a mistake.
IMMIGRATION STATUS WILL BE AFFECTED AND YOU WILL NEVER
BECOME A CITIZEN
- Not true: Filing bankruptcy is NOT a crime and will NOT affect your Green Card or citizenship.
YOUR BANKRUPTCY WILL BE IN THE NEWSPAPERS AND EVERYONE WILL KNOW ABOUT IT.
- Filing a bankruptcy is a “public record”, but unless you’re a celebrity, it won’t be in the papers.
YOU CAN’T AFFORD TO FILE BANKRUPTCY.
- At McFerran and Burns, we accept installment plans to pay for fees.
- Aside from a pre-filing minimum, Chapter 13 fees can be as part of the plan.
- You will be instructed to stop paying all unsecured creditors, freeing funds to pay you attorney fees.
YOU ARE A FAILURE IF YOU FILE BANKRUPTCY
- No. Four Presidents have filed bankruptcy. Donald Trump filed four bankruptcies. Other famous filers include John Wayne, Larry King (twice), Henry Ford, Walt Disney, Mike Tyson and Kim Bassinger.
Don’t make the mistake of listening to friends or family about bankruptcy. “Street knowledge” is often wrong. Call us at 253-284-3838, Option 1 to schedule a FREE consultation and get the facts. We can confer with you at any of our five locations; Tacoma , Seattle (Northgate), Kent, Silverdale and Everett. Bankruptcy may or may not be the solution to your client’s financial woes. Only a qualified bankruptcy professional, like those at McFerran and Burns, can give you the appropriate guidance.
Richard J. Welt
Attorney at Law
McFerran & Burns, P.S.
Phone: (253) 284-3811
Fax: (253) 284-3855
