BankruptcySo how does bankruptcy work? First of all bankruptcy is not a scam…it is an area of the law designed to protect debtors and help them get back on their feet. The government’s policy is to help avoid creditors’ going after debtor’s assets over bad debt. When people have debt they cannot purchase items way they can with good credit. Basically everyone wins when you get out of debt! Bankruptcy can be a stressful time, but so is the constant phone calls and harassment. The constant fear of garnishments on wages and bank accounts. The fear of having your state or federal tax returns intercepted by creditors. Chapter 7 bankruptcy stops all of this from happening and allows you to get your peace of mind back.
Myths About Bankruptcy
- DO NOT ASSUME THAT YOU WILL LOSE YOUR ASSETS BY FILING A BANKRUPTCY - Bankruptcy is designed to help you keep your car, house, and your retirement.
- BANKRUPTCY DOES NOT RUIN YOUR CREDIT FOR 7-10 YEARS! For 7-10 years the credit bureau reports your bankruptcy filing, but the reality is that soon after getting a discharge you will get credit card offers…it is even possible to get a mortgage in a few years. The reason you will get credit soon is that the financial institution needs you back! Your debt to income ratio will be improved. Plus, they know that you can’t file again for four to eight years Attorney Andrew Kirkpatrick can show you how to rebuild your credit!
- IN MOST CASES, A DEBTOR’S CREDIT IS AT ITS WORST PRIOR TO FILING A BANKRUPTCY! Your credit may already be rock bottom and you realistically can’t use financing anyway. Bankruptcy will only help your credit in this scenario because your slate will be wiped clean, and you will be on your way to a fresh start. Don’t get stuck paying minimum balances that do not reduce your principal balance! Also, don’t make the mistake of bleeding your 401k and retirement accounts dry trying to pay of credit card debt that you ultimately may have to file on anyway. Don’t forget, 401k and retirement accounts are protected in a bankruptcy, don’t jeopardize your retirement trying to get ahead.
- BE CAREFUL OF WHAT NON-LAWYERS TELL YOU! First off, don’t believe anything your credit card or mortgage company tells you. They don’t want you to file bankruptcy because they will lose a lot of money. Be careful basing decisions solely on real estate agents, debt consolidators or investors- they are not attorneys- and they do not understand your legal rights. Also, don’t let other people’s opinions or assumptions of bankruptcy impact your decision. Bankruptcy is a complex area of the law and is designed to PROTECT you. Most, if not all, credit counseling companies charge enormous up front costs to try to negotiate your debt. Many do not tell you that once a debt is settled for less than what is owed, you will most likely receive a 1099 at the end of the year and have to pay federal income taxes on the balance.
STOP GARNISHMENT AND REPOSSESSIONSFiling a Chapter 7 bankruptcy will stop garnishments, including tax intercepts, IMMEDIATELY, in fact, any garnishment taken by a creditor within the 90 days before filing will be returned to you. Court Judgments are removed, as well as liens. If your vehicle has been repossessed, it will be returned within days of filing a Chapter 7. If money is owed on the vehicle, it will have to be paid if you wish to keep it, but if it is paid off it will be returned and exempted in the bankruptcy. This means you get to keep your vehicle. If your vehicle is repossessed and you owe any deficiency, this is also dischargable.
GET RID OF DRIVER RESPONSIBILITY FEES THROUGH THE MICHIGAN SOSMany people do not have a Michigan driver’s license because they owe thousands in driver responsibility fees. These fees are DISCHARGEABLE in a chapter 7 bankruptcy. If this is the only thing stopping you from getting your drivers license back, you will have these fees removed within days of your filing for Chapter 7 bankruptcy.
STOP CREDITOR LAWSUITS DEAD IN THEIR TRACKSImmediately upon filing a Chapter 7 bankruptcy, your creditors will receive a notice of automatic stay. What this means is that they will no longer be able to enforce or collect against you. It also means that any State Court proceedings will be administratively stayed and ultimately dismissed upon your discharge.
GET RID OF MEDICAL BILLSMany people are stuck without insurance, others have insurance with high deductibles or insurance that does not cover the majority of care. All medical and dental bills are dischargeable in bankruptcy, even if they are with a collection agency or are in the form of a Judgment in State Court.
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