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Debt Relief: Surviving the Financial Storm

For many hard working Americans, the word "Bankruptcy" has devastating connotations. Bankruptcy is synonymous to "failure", "financial crisis" and even "shame". Because of this stigma, it is a very difficult decision for most people to make. Even when hit with job loss, health problems, lawsuits, mounting credit card debt, heavy mortgage debt, and foreclosure, they refrain from filing bankruptcy because they are afraid of it. They seek relief only after they've exhausted all other alternatives. When they finally seek protection from creditors under the US Bankruptcy Code, they are emotionally and financially exhausted, hoping to stop the collection calls, save their homes, and stabilize their economic circumstances.

Some common misperceptions about bankruptcy are also the same reasons people refrain from seeking relief under the Bankruptcy Code. There are many myths surrounding bankruptcy. Some are true, some are not, and some are merely nonsense. But in the end, bankruptcy can be a favorable and beneficial outcome to provide real hope for those who have fallen on hard times and are overburdened with debt. The following is a list of the most common myths related to bankruptcy:

Myth #1: If I file for bankruptcy, I will lose all of my assets (i.e., house, car, etc...)

False. The type of bankruptcy (Chapter 7 or 13) determines which assets may be exempted or seized. There are also state laws that protect debtors from losing certain types of assets, such as your property, your car, your clothes, etc.

Myth #2: If I file for bankruptcy, I will automatically lose my business...

False. Again, the type of bankruptcy will determine whether or not your business is liquidated, and such a decision is fact specific to each individual's circumstances.

Myth #3: If I file for bankruptcy, I can keep my car, house and boat without having to pay off the secured loans when included in the bankruptcy...

False. If the loan is secured against the property, (i.e. you gave a lien on the car for the purchase price,) you can't keep it without paying the loan.

Myth #4: If I file for bankruptcy, all debts are discharged...

False. Certain debts such as alimony, child support, student loans and most taxes are not discharged.

Myth #5: If I file for bankruptcy, I will never be able to file again...

False. There are limitations to the frequency of the bankruptcy filing, but it is not a one-time-only procedure. You can file Chapter 7 bankruptcy once every 8 years. With a Chapter 13, the frequency increases, but you may not file again if your previous file has not been discharged yet.

Myth #6: If I file bankruptcy, my credit will be ruined forever and I will never qualify for a loan again...

False. It is true that bankruptcy filing will be noted on your credit report for 10 years. However, credit card offers will start arriving again in the mail within a few months after filing bankruptcy. You can rebuild your credit and eventually qualify for loans to finance cars and other property.

Myth #7: If I file bankruptcy, I could lose my job or never find employment...

False. With written permission, your current or future employer can check on your credit report. However, the statute under the bankruptcy code prohibits discrimination against an individual who is or has been a debtor.

If you are being harassed by credit card companies, about to lose your home, owe more for your car than your vehicle is worth, we may be able to help you. We can provide fast and effective legal help to protect your home and property from foreclosure and repossession, reduce your debt obligations, modify your home or car loan and prevent or stop wage garnishments or creditor harassment.

Christina Shin is an attorney with Wescott Rowe, LLP, a full service law firm in Rockville, MD. She can be reached at 301-770-4710.

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