Explained By Kansas City Bankruptcy Attorneys
Bankruptcy has a bad reputation in the United States. Far too many people believe bankruptcy means you are irresponsible. Some believe that you will lose all your belongings if you file for bankruptcy. However, these common misconceptions are bankruptcy myths that have little basis in reality.
Bankruptcy is an effective way to wipe away debts while protecting important assets. This process can also help protect you from creditors and their harassing phone calls. Our Kansas City bankruptcy attorneys want to bust the following common bankruptcy myths.
Bankruptcy Means Losing All Belongings
Bankruptcy does not mean losing all of your belongings. When you file for Chapter 13 bankruptcy, you pay back certain debts through a three to five-year repayment plan. You may keep your property during the Chapter 13 bankruptcy. Additionally, you may receive a discharge on remaining unsecured non-priority debts at the conclusion of a Chapter 13 case. However, only filers with a regular source of income can file for Chapter 13 bankruptcy.
Another option is Chapter 7 bankruptcy. Depending on the circumstances, you may be able to exempt certain properties or assets from your bankruptcy case. For instance, under the Missouri Homestead Exemption, homeowners can protect a certain amount of equity in their homes. Missouri also has bankruptcy exemptions for other types of personal property such as:
- Household goods,
- Retirement accounts, and
Need exemptions to protect the value of your property? Kansas has specific exemption laws. These laws protect the value of your
- Personal belongings,
- Retirement accounts, and
- Other valuable assets.
Bankruptcy Cannot Stops Lawsuits, Repossession, Judgments, or Garnishments Once they have Started
This is an incorrect assumption. When a person files for bankruptcy, a legal protection call the automatic stay immediately goes in to effect. This stops all sorts of current legal proceedings such as:
- Garnishments, and
- Most all other types of collection activity against you.
Even if these collections activities have already started, and automatic stay halts them.
Bankruptcy Means Permanently Destroyed Credit Scores
False. Your credit scores can recover even after filing Chapter 7 or Chapter 13 bankruptcy. Initially, bankruptcy will impact your credit score. However, it is possible to begin improving your scores immediately after your case concludes.
After your Chapter 7/ Chapter 13 bankruptcy is complete, several actions assist in rebuilding credit. Regular income going forward shows potential lenders you can afford to pay back debts. Also, paying your regular expenses and any existing debts help establish a payment history going forward.
Do not wait to file for bankruptcy! When facing insurmountable debts and creditor collection actions, waiting can destroy your long-term credit health. Credit bureaus may add more harmful information to your reports. You could also lose your property to creditors.
Married Couples Have to File Bankruptcy Together
It may be possible to file for bankruptcy without involving your spouse. However, some spouses may share liability for debts, which could make it beneficial for both spouses to file. This is because if one spouse were to file bankruptcy but the other did not, creditors could still go after the spouse who did not file a case.
Have questions about filing a bankruptcy case with your spouse? We encourage you to contact our bankruptcy lawyers for a consultation.
You Cannot File for Bankruptcy Multiple Times
Hopefully, a single bankruptcy is enough to rebuild your finances. However, you may file for bankruptcy more than one time under the right circumstances. Contact our Kansas City bankruptcy lawyers to learn more about eligibility.
Bankruptcy Discharges All Types of Debt
Certain debts are difficult to discharge, and some are not possible at all. Student loans are the most well-known example of a debt that is difficult to discharge. With student loans, you must demonstrate undue hardship to receive a discharge. The rules for demonstrating undue hardship vary depending on where you file and your specific financial situation.
Bankruptcy also cannot discharge unpaid child support or alimony (spousal support). You also cannot discharge certain tax debts in bankruptcy.
Bankruptcy Filers Are Financially Irresponsible People
Injury, illness, job loss or divorce can strike without warning. Life may sometimes kick us when we are down. Often we face these difficulties through no fault of our own. Bankruptcy provides a lifeline for people struggling with the hardships of life. Filing for bankruptcy does not mean a person is irresponsible.
Do Not Listen to Bankruptcy Myths! Ask Our Missouri Bankruptcy Attorneys Your Bankruptcy Questions
Bankruptcy myths are insidious. They will warp the way you see bankruptcy and convince you not to use tools that were purpose built specifically for your financial situation. Do not let myths scare you. Ask our experienced Kansas City bankruptcy attorney Ryan Kiliany the questions you need answers to. Troppito Miller Griffin, LLC can answer your questions about Missouri bankruptcy exemptions, filing options and much more. Call (816) 221-6006 or use the contact form on our site.