Explaining, Debunking, and Answering
- Only certain people in specific situations can file bankruptcy. - False. Almost anyone can file a Chapter 13 and those passing the means test can file a Chapter 7. The question is not “can I file” but “should I file?” At Mike Reiter & Associates we will evaluate your unique situation and help you determine if bankruptcy is right for you.
- If I file I will lose everything. - False. Florida has very specific exemptions (remember that’s the value of the property you get to keep– see Bankruptcy 411-terms) and some assets like IRS qualified retirement plans for example are 100% exempt. If you owe on property like a home or a car, then you get to keep anything you can afford to keep paying for through Reaffirmation. If you can’t afford your secured property anymore, then you should Surrender it through the bankruptcy back to the lender who will not be able to pursue you for a deficiency. If you don’t have a lot of equity in anything and your furniture wasn’t handmade and imported from Italy or something, then you’ll be fine. And even if you are over your exemptions and you can’t bear to part with the Beanie Baby collection (or surrender other property for the trustee to sell), the trustee will likely allow you to “buy it back” from the estate over time (up to a year) at no interest. Trustees are merely court sanctioned debt collectors. If there’s anything to collect they get a percentage of the amount they collect as their fee so they will be happy to receive your money without the hassle and expense of an auction.
- Someone will come and appraise my property for the court. – It’s possible. But unlikely unless there is a suspicion that you are hiding assets or you have seriously undervalued your property. We use the “smell” test; does it smell right or ripe? If your income has been under $5o,ooo a year and you’ve got dependents, it is doubtful you own much of real value unless you inherited it, someone gave it to you, or you take extraordinarily good care of your stuff. Mike Reiter & Associates will aid you valuing your property. If you’re really worried you can hire your own personal property appraiser.
- I must list everything I own (assets) and everything I owe (liabilities) in the bankruptcy petition. - True. Well, maybe not the junk drawer or the 10 yr. old broken PC, but everything else of value no matter how it was acquired or who else may be paying for it. It doesn’t matter that the old pick-up truck was a gift; if you are on the title or deed or would report property if stolen then you own it. Don’t worry, our questionnaire is comprehensive and designed to help you comply with all the reporting requirements on the petition. We’ll take care of you!
- My neighbor said he transferred his non-exempt property to his brother until the bankruptcy was over and his lawyer said it was legal. - Lies! Your neighbor committed bankruptcy fraud by hiding assets and his attorney told him no such thing or he planed on joining the neighbor in federal prison. The Feds can throw the brother in too! At the 341 Meeting of Creditors you will be put under oath and your responses recorded, which can then be used as evidence against you if you lie and the authorities find out. Lots of trustees do public asset searches and they will find fraudulent transfers. Here’s the rule at Mike Reiter & Associates: if you’re going to lie to someone then lie to your spouse, mother, preacher or anyone else but don’t lie to us. We can only protect you with the truth.
- Bankruptcy is only available once in a lifetime - False. Because financial emergencies such as divorce, job loss or extended illness could happen more than once in your life, the law allows you to receive a discharge from a Chapter 7 bankruptcy once every eight years, and a person can often file for Chapter 13 several times if necessary depending on that person’s individual situation. Maybe though, serial filers should consider examining why they keep going down the same path expecting different scenery.
- A debt collector called and said I could go to jail if I don’t pay the debt regardless of bankruptcy. Lie! We hope you wrote that down because you have a GREAT Debt Collection Violation case and might not need a bankruptcy after all. But seriously, the myth that you can be imprisoned for owing consumer debt is so pervasive and persistent that we can’t help wondering where all the debtor prisons are? Who do you know that’s in prison because he defaulted on a Sears card? Stop believing anything a creditor or debt collector tells you regarding default! Also, creditors can’t eat you either so why are you panicking?
- If I list the debt I owe to the orthodontist she’ll stop tightening my kid’s braces. We doubt it. You must list the dentist and besides, just because she’s listed doesn’t mean you can’t keep paying her. The bankruptcy means she can’t bill you for pre-filing unsecured debt. Go to your medical providers, explain your situation, and keep paying them on schedule if that’s the only way they will continue non-emergency treatment.
- I’ll have to close my bank accounts and I won’t be able to use my credit cards that have zero balances? Both false and true. False that you will have to close your bank accounts but true that the creditor will likely revoke the credit card, even if you cost it no money in the bankruptcy. In nearly every case, you will still have access to your debit card but it really is up to the bank or credit union. Bankruptcy can not force creditors to do future business with you.
- I’ll never be able to get another credit card or loan? – False. Bankruptcy is about your past credit and new credit is about your current income, payment history on secured debt and other factors. Most gainfully employed filers are surprised at how quickly they can recover. It’s not that you won’t be able to get credit, but that your credit will be very expensive for awhile. Be sure to read about rebuilding your credit and managing your financial life at www.ftc.gov (the Federal Trade Commission) so you don’t end up going down the same path as before.
- If I’m married my spouse must also file bankruptcy if I do. – False. You may file alone or you may even file separate petitions. However, separate petitions are a pretty expensive route unless you’re divorcing contentiously or separated by great and unmanageable distance. At Mike Reiter & Associates we’ve filed many divorcing couples together since they discover it’s much cheaper and convenient.
- There are some debts that can’t be discharged. – True. What can be discharged varies in each chapter but generally debts incurred by fraud, intentionally harmful actions, dishonesty, priority taxes, unfiled taxes, family support obligations, student loans, criminal fines, some intentional torts, and criminal restitution can not be discharged.
- Creditors and debt collectors have to stop contacting me and lawsuits and garnishments will stop. – True. Once your case is filed, creditors are no longer entitled to garnish your wages for previous debts, and all civil lawsuits will stop (with some very limited exception). Creditors and collectors may not contact you after filing unless they’re granted expressed permission from the court or the bankruptcy was dismissed without discharge.
850-277-0777, PO Box 330, Lynn Haven, FL 32444, email: mikelawbk@gmail.com.
Nothing contained on this website constitutes legal advice, and no attorney-client relationship exists either expressed or implied. If you have specific legal questions seek the advice of an attorney.