Bankruptcy Myths

At The Fox Valley Legal Group, we often get asked many of the same questions that demonstrate popular misconceptions concerning bankruptcy. As a reminder, bankruptcy can be a very effective means of tackling serious financial problems but it is not necessarily for everyone. There are other options and you should arrange for an initial consultation with a bankruptcy lawyer to fully understand and discuss these.

Common Bankruptcy Myths:

1.  You will lose your home or car if you file for bankruptcy.
This is not necessarily the case. Bankruptcy protects many assets including household goods, bank accounts, settlements, retirement funds and other types of property. While there may be certain exceptions, these will be covered in your initial meeting and these generally can be handled by filing bankruptcy properly. Of course, to keep secured items such as a home or car one must continue to make payments as agreed.

2.  Bankruptcy cannot help me in a foreclosure situation.
This is not true. You will most likely need to file Chapter 13 bankruptcy and this can stop the foreclosure cold. During this time, the court will allow a reorganization of debts and this will buy the time you need to work out how to both save your home and continue to afford your home. In some cases, it may be the best option to turn the home over to the lender and this is best done with the legal guidance of a lawyer to ensure the proper protections are in place for you.

3.  I have already been sued and have a judgment against me so a bankruptcy cannot help.
This is not the case because even if a judgment has been made against you, bankruptcy can still stop creditors from collecting.

4.  Creditors will continue to call because they have the right to collect on the debts. 
Once the bankruptcy goes into place, you are protected by the courts and creditors must cease their collection activities against you. At the Fox Valley Legal Group, we will enforce this to the limit.

5.  I can file bankruptcy and get rid of all my debt.
This is not necessarily true as bankruptcy will not excuse unsecured tax debts or student loans. Nor will it dismiss secured loans such as those backed by a home or a car.

6.  I must go to court to file for bankruptcy.
Only in exceptional circumstances will you need to appear in court and face questioning or be confronted by creditors. This is the job of an attorney and will be handled in almost all cases by your lawyer.

There are many questions and many wrong ideas about bankruptcy. Contact us today to get all your questions answered.