Bankruptcy attorneys agree that bankruptcy should be a last-resort solution for climbing your way out of debt. Before resulting to bankruptcy, it's important that you have attempted to exercise all other options, including cutting personal spending, seeking debt consolidation, and taking a look into other debt-relief options.
Still, if all else has failed, you shouldn't be afraid to file for bankruptcy if your situation truly calls for it. Unfortunately, many people are still hesitant to take this step due to the many myths and misconceptions that exist about bankruptcy.
If you are thinking about filing for bankruptcy in San Jose, Attorney James "Ike" Shulman of Shulman Law Offices is here to help answer all of your questions about bankruptcy and help you decide whether it's the best option for you.
For now, here are some common myths that don't hold up under further analysis.
Bankruptcy is reserved for the financially irresponsible.
Many people assume that bankruptcy is only for irresponsible people who are bad at managing money. However, even the most conscientious penny-pinchers can fall on hard times. For example, getting laid off can leave a huge hole in your budget, or a steep medical bill can leave you deep in debt.
Bankruptcy is reserved for anyone who faces insurmountable debt and is a perfectly honest and legal way to get back on solid financial ground.
I will be forced to give up my home.
Some people are hesitant to file for bankruptcy because they're afraid they'll lose all their earthly possessions in the process—including their San Jose homes. While Chapter 7 bankruptcy may involve the liquidation of some assets, many assets are exempt. Common exemptions include homes, cars, clothes, and wedding rings.
Depending on your circumstances, you may decide which possessions you keep. If you file Chapter 13 bankruptcy, you can avoid property liquidation by agreeing to a three to five-year debt repayment plan.
Filing for bankruptcy is almost impossible.
In 2005, the bankruptcy laws changed to make filing for Chapter 7 bankruptcy more difficult. Now, debtors must pass the "means test" before they can file for Chapter 7 bankruptcy.
To pass the means test, your income must be less than the expenses allowed for a household of your size. Even if you don't pass the means test, you're likely a good candidate for Chapter 13 bankruptcy.
Bankruptcy will affect my credit score forever.
If you're deep in debt, you might be concerned about the effect bankruptcy will have on your credit. While it's true that bankruptcy will negatively affect your credit score, wallowing in debt will likely have a worse effect on your credit.
After you file for bankruptcy, you can begin rebuilding your credit immediately and restore it to its former heights. Also, bankruptcy only remains on your credit record for 10 years.
If you still have questions about bankruptcy law that aren't addressed here, or would like to schedule a bankruptcy consultation, call the Shulman Law Offices at 877-763-7883.