A few weeks ago we posted 5 Bankruptcy Truths. Since there is so much misinformation about bankruptcy out there, we decided to do a follow-up article and share 5 more bankruptcy truths!
Bankruptcy can help you gain financial freedom to help you make today the first day of the rest of your life. Imagine waking up to a new day, debt free. Imagine the freedom of no longer living under the debilitating weight of debt. Imagine… how the power of bankruptcy can change your life.
Bankruptcy Truth I: Debts erased in bankruptcy are erased forever, and you do not have to pay them back or pay taxes on the amount of discharged debt.
Debts that are erased in bankruptcy, including credit card and medical debts, are gone forever. Creditors of discharged debts can never legally attempt to collect payment on those debts.
Also, bankruptcy does not create new tax liabilities. In general, “forgiven debt” is considered “income” by IRS standards, and may create tax liabilities. On the other hand, “discharged debt” in bankruptcy is erased and taxes are not assessed on discharged debt.
Bankruptcy Truth II: Collection phone calls must stop as soon as you file for bankruptcy.
In fact, all collection action against you must stop once you file for bankruptcy. This means collection phone calls, wage garnishments, bank levies, lawsuits for unpaid debts, and past due bill statements, must stop.
That is the power of the Automatic Stay.
Bankruptcy Truth III: Even people with high incomes are able to qualify for bankruptcy.
It is a myth that high-income earners cannot qualify for bankruptcy. If your income is above the median income for your state and household size, then you must run the means test to determine whether or not you qualify for Chapter 7 bankruptcy. The means test is a review of your income minus allowable expenses.
The means test makes qualifying for Chapter 7 bankruptcy a little more difficult; however, an experienced bankruptcy attorney can help you navigate the means test and qualify for the debt relief you deserve.
Bankruptcy Truth IV: Bankruptcy is not a contentious courtroom battle.
Bankruptcy is a legal remedy to get out of debt, it is not a courtroom battle. Throughout the bankruptcy process, no one can harass you or threaten you. No one can demand an answer as to why you have filed for bankruptcy. Read our article Bankruptcy Is Not A Courtroom Battle to learn more.
Bankruptcy Truth V: Your credit will improve after a bankruptcy.
In the short term, bankruptcy does negatively affect your credit score, but it will begin to recover after bankruptcy. After filing, you will have little to no debt, making your debt to income ratio favorable. This makes you a viable candidate for a loan or line of credit.
Deciding Bankruptcy Is the Right Choice for You
Here at the Law Office of Barbara B. Braziel we will make sure you understand the benefits of bankruptcy and how filing with affect you and your family. We file hundreds of Chapter 7 and 13 bankruptcy cases every year. But our clients are never just a number. You will not be left in the hands of a paralegal. You will have access to your attorney throughout your bankruptcy case.
We are a debt relief agency. We help people file for bankruptcy relief under the U.S. Bankruptcy Code.