Bankruptcy Myths

Common Bankruptcy Misconceptions

Get the Facts from an Experienced Attorney: 719-632-2022

Different people have different reasons for putting off filing for personal bankruptcy: the social stigma, feelings of guilt, or the belief that "things will turn around for us." However, bad information should not be the reason holding you back.

Please read the sections below if you are considering filing for Chapter 7 or Chapter 13 bankruptcy. Then contact my Colorado Springs office to discuss how the laws apply to your specific situation. I offer 20 years of experience, including 13 years of exclusive practice in consumer bankruptcy, serving clients in El Paso, Teller, Pueblo, and Fremont Counties.

Myth: There is no more bankruptcy.

Reality: The recent changes in the federal bankruptcy law were not targeted at the average personal bankruptcy filer who has gotten into deep debt. The legislation was primarily designed to keep a few "bad apples" from abusing the system. For most citizens, bankruptcy remains a viable avenue for debt relief.

Myth: I make too much money to qualify.

Reality: Of those who would have qualified for Chapter 7 bankruptcy under the old rules, I find that about 90 percent are still eligible. I have had considerable success helping those people whose income and assets are on the borderline qualify under the new means test. For the other 10 percent, Chapter 13 reorganization of debts also remains available to most to get relief from creditors.

Myth: I will lose everything.

Reality: Most of my clients do not lose any assets. In Chapter 13, you retain all your possessions, including your home and car if you choose to continue monthly payments. In Chapter 7, most assets are safe from being liquidated to pay creditors: for example, all retirement funds and up to $60,000 in home equity are exempt.

Myth: Filing for personal bankruptcy will ruin my credit rating.

Reality: Bankruptcy may actually improve your credit rating over time. If you have been carrying a lot of debt and skipping payments, your credit score is already at rock bottom. It is true that after filing for bankruptcy, you will be initially rejected on credit applications or charged very high interest rates. However, (a) if you have just wiped out your debts, you should not need much credit, and (b) within about two years, most debtors can re-establish a solid credit rating and be eligible for mortgages, car loans and credit cards at reasonable rates.

Myth: If I file for bankruptcy, I will be sued.

Reality: Filing for personal bankruptcy actually halts all legal action against you, including foreclosure, repossession, collections, and liens. As soon as they are notified of your filing, creditors must immediately stop calling you or harassing you by mail. You can be sued for fraud if a creditor asserts you have lied about your assets or income. I am a proven trial lawyer with extensive experience defending clients in bankruptcy litigation.

Myth: Everyone will know.

Reality: It is unlikely anyone will find out. Bankruptcy Court proceedings are usually not published. Your employer cannot discriminate against you for filing or relay that information to others to defame you.

Is bankruptcy right for you? Maybe, maybe not. Contact John Turner, Attorney at Law today at 719-632-2022 to schedule your free consultation.

We are a debt relief agency. We help people file for relief under the Bankruptcy Code.