Myth 1: Medical Bills and Credit Cards Can No Longer Be Wiped Out or Discharged

This, of course, is wrong. Medical bills and credit cards will continue to be the most common types of debt discharges by all types of bankruptcy under the bankruptcy reform law. There are no limitations on the amount or type of medical bills or credit cards that a client may include in their bankruptcy.

Myth 2: You Can't File for Bankruptcy If You Own a Home or More Than One Car

There are no restrictions about the number of homes or cars you may own before you may file. The real issue that must be addressed is whether any of those assets would be lost in a Chapter 7 proceeding because its value or “equity” may be beyond the amount that our state law allows you to exempt and protect from creditors.

Myth 3: You Can No Longer Stop Home Foreclosures or Reduce Car Payments

One of the most powerful aspects of the bankruptcy process is the ability to stop a foreclosure and allow a person to catch up on their missed mortgage payments over time if they have fallen behind. Secured debts that include car loans may still be adjusted and restructured to make them more affordable. This extraordinary power remains unchanged.

Myth 4: Bankruptcy Permanently Kills Your Credit

Filing for bankruptcy does not completely terminate your credit. You can expect to have limited access to new credit initially after filing, but the effects are not permanent. While the filing of bankruptcy will appear on your credit report for 7-10 years, the impact of filing will lessen throughout those years. According to a report from the Federal Reserve Bank of Philadelphia, those who filed for Chapter 7 bankruptcy in 2010 had an average credit score of 538. In the 6-8 months it took bankruptcies to be finalized, their scores jumped up to an average of 620.

Fact 1: There's More Than One Type of Bankruptcy

Before making a decision on filing for bankruptcy there are different options to consider under the bankruptcy code. The two most common bankruptcy filings for individuals are Chapter 7 and Chapter 13. Filing Chapter 7 generally allows debtors to discharge the majority of their debts and wipe the slate clean. Chapter 13 bankruptcy allows individuals to reorganize their debt and make payments to their creditors over an extended period of time.

Fact 2: The Amount of Money You Make Matters

When filing for bankruptcy the amount of money you make matters. Anyone can file for bankruptcy, but your income helps determine what chapter you qualify for. Chapter 7 bankruptcy has income requirements, meaning if you make too much you may have to file for Chapter 13 bankruptcy.

Fact 3: Filing Bankruptcy Can Be Complicated and Time-Consuming

When Congress passed bankruptcy reform back in 2005, it imposed a multitude of paperwork requirements, documentation, and extensive proof of assets and their values that must be presented in every case. It’s more important than ever to get the help of an experienced bankruptcy attorney to help guide you through the process because of the many different requirements that clients face under the new law.

Fact 4: Filing For Bankruptcy is Affordable

Despite the increased costs of mandatory debtor education and counseling course requirements under the bankruptcy code, bankruptcy is still affordable. At Cox Law Group, we strive to offer affordable flat fees and work with each client individually to come up with payment options.

Bankruptcy Myths and Facts

Cox Law Group, PLLC

Separating Fact From Fiction

Our consumer bankruptcy attorneys at Cox Law Group, PLLC often have to address a number of questions or concerns regarding bankruptcy myths from prospective clients at their initial consultations. Many times, clients are initially hesitant about bankruptcy because of the different rumors or myths they have heard from friends or family.

During our free initial consultation for consumer cases, our attorneys will answer any bankruptcy questions or concerns you may have. We will explain the bankruptcy law as it applies to those questions or concerns, and whether it impacts your unique financial situation. In short, we will help you separate fact from fiction with respect to bankruptcy. Fill out our online form to schedule your appointment with Cox Law Group today!

Common Myths About Bankruptcy

Most of the bankruptcy questions or myths that our bankruptcy attorneys address relate back to the Bankruptcy Abuse Prevention Consumer Protection Act (BAPCPA) of 2005. This legislative act made several significant changes to the United States Bankruptcy Code and has generated a number of questions and concerns from prospective clients that are interested in filing for bankruptcy. Listed below are some of the most frequent questions we receive:

Myth 1: Medical Bills and Credit Cards Can No Longer Be Wiped Out or Discharged

This, of course, is wrong. Medical bills and credit cards will continue to be the most common types of debt discharges by all types of bankruptcy under the bankruptcy reform law. There are no limitations on the amount or type of medical bills or credit cards that a client may include in their bankruptcy.
Myth 2: You Can't File for Bankruptcy If You Own a Home or More Than One Car

There are no restrictions about the number of homes or cars you may own before you may file. The real issue that must be addressed is whether any of those assets would be lost in a Chapter 7 proceeding because its value or “equity” may be beyond the amount that our state law allows you to exempt and protect from creditors.
Myth 3: You Can No Longer Stop Home Foreclosures or Reduce Car Payments

One of the most powerful aspects of the bankruptcy process is the ability to stop a foreclosure and allow a person to catch up on their missed mortgage payments over time if they have fallen behind. Secured debts that include car loans may still be adjusted and restructured to make them more affordable. This extraordinary power remains unchanged.
Myth 4: Bankruptcy Permanently Kills Your Credit

Filing for bankruptcy does not completely terminate your credit. You can expect to have limited access to new credit initially after filing, but the effects are not permanent. While the filing of bankruptcy will appear on your credit report for 7-10 years, the impact of filing will lessen throughout those years. According to a report from the Federal Reserve Bank of Philadelphia, those who filed for Chapter 7 bankruptcy in 2010 had an average credit score of 538. In the 6-8 months it took bankruptcies to be finalized, their scores jumped up to an average of 620.

Top Bankruptcy Facts

Before filing for bankruptcy there are many factors to consider. One of the reasons that we offer a free initial consultation for consumer cases at Cox Law Group, PLLC is to take the time to explain all of the benefits and burdens of a potential bankruptcy filing. Bankruptcy offers many people the debt relief they need and a fresh financial start.

Fact 1: There's More Than One Type of Bankruptcy

Before making a decision on filing for bankruptcy there are different options to consider under the bankruptcy code. The two most common bankruptcy filings for individuals are Chapter 7 and Chapter 13. Filing Chapter 7 generally allows debtors to discharge the majority of their debts and wipe the slate clean. Chapter 13 bankruptcy allows individuals to reorganize their debt and make payments to their creditors over an extended period of time.
Fact 2: The Amount of Money You Make Matters

When filing for bankruptcy the amount of money you make matters. Anyone can file for bankruptcy, but your income helps determine what chapter you qualify for. Chapter 7 bankruptcy has income requirements, meaning if you make too much you may have to file for Chapter 13 bankruptcy.
Fact 3: Filing Bankruptcy Can Be Complicated and Time-Consuming

When Congress passed bankruptcy reform back in 2005, it imposed a multitude of paperwork requirements, documentation, and extensive proof of assets and their values that must be presented in every case. It’s more important than ever to get the help of an experienced bankruptcy attorney to help guide you through the process because of the many different requirements that clients face under the new law.
Fact 4: Filing For Bankruptcy is Affordable

Despite the increased costs of mandatory debtor education and counseling course requirements under the bankruptcy code, bankruptcy is still affordable. At Cox Law Group, we strive to offer affordable flat fees and work with each client individually to come up with payment options.