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Debunking Myths About Filing For Bankruptcy

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Filing for bankruptcy is a right granted by Congress that has, over the years, allowed millions of Americans to obtain life-improving debt relief. Indeed, more than three-quarters of a million Americans file for bankruptcy every year. Obtaining debt relief through a bankruptcy can significantly improve your mental and emotional well-being.

That being said, deciding to file can be scary. What is worse, there are many myths about filing that unnecessarily raise the "fear quotient." Hiring experienced debt relief attorneys, like those at Guardian Litigation Group, is often the fastest way to "get past the fear." Another important step is to realize that many of the myths are false. Here are several bankruptcy myths debunked.

Myth: I am Going to Lose All My Stuff!

False. Most individuals who file for bankruptcy are able to keep their furnishings and belongings. First, there are exemptions here in Irvine and elsewhere in California that allow a debtor to exempt certain property from being sold in a bankruptcy. For example, under one exemption option, there is a $30,825 “wildcard exemption” that can be used to exempt equity in a home or value in any other property like furnishings or vehicles. Bankruptcy exemptions can be complicated which is another reason for retaining experienced Irvine bankruptcy attorneys.

Second, and more practically, the bankruptcy court does not have the time, personnel and administrative capacity to sell all of your "stuff" to raise money to pay your creditors. The bankruptcy court is not coming to your house/apartment to operate a yard sale. The Trustee will only have the time and inclination to sell items that have significant commercial value and that can be sold easily and quickly.

Myth: I am Going to Have to Go to Court!

False. Most individuals never have to appear before the bankruptcy judge. For most debtors, the only required official appearance is at the 341 Meeting of Creditors. That meeting is informal and, often, only three or four people attend: the debtor, the debtor's attorney and the Trustee.

Myth: I Will Never be Able to Buy a House!

False. Most debtors are able to significantly repair their credit scores within the first two or three years after discharge. Consequently, most debtors are able to obtain conventional mortgage financing after three years. However, even during the first couple of years after discharge, many debtors can obtain mortgage financing through the Federal Housing Administration (“FHA”). Most debtors are eligible at the two-year mark, but some debtors can be eligible for an FHA-backed loan after 12 months if certain conditions apply.

Myth: I am a Bad Person if I Have to File for Bankruptcy!

Again, this is false. Many individuals file for bankruptcy for reasons beyond their control. High medical bills resulting from an accident and/or losing one's job are common reasons why individuals may have to file for bankruptcy. Further, even if bad financial habits played a role in uncontrollable debt accumulation, it is often impossible to embark on the path to improvement without obtaining debt relief. White it can be tough to do, making the decision to file is often the first step.

Myth: Filing Bankruptcy Will Affect My Job!

False. Under California law, you cannot be fired or suffer any adverse employment decision because you exercise your rights to obtain debt relief through a bankruptcy.

Contact an Experienced Debt Relief and Debtor Rights Attorney

For more information, contact the Debtor's Rights attorneys at Guardian Litigation Group. We have the tools and experience you need. Our Mission is to provide unparalleled legal services and support to financially distressed individuals. We can be reached via our contact page