Bankruptcy could be the best thing that happened to you!

"I didn't see it then, but it turned out that getting fired from Apple was the best thing that could have ever happened to me. The heaviness of being successful was replaced by the lightness of being a beginner again, less sure about everything. It freed me to enter one of the most creative periods of my life. [...] Sometimes life hits you in the head with a brick. Don't lose faith. I'm convinced that the only thing that kept me going was that I loved what I did."

Steve Jobs.

So when you feel the pressure of having made the decision to take control of your fiances and file for bankruptcy to clean up your debts for a fresh start -  remember, the heaviness of all of that debt will be replaced by the lightness of the debt being discharged in bankruptcy, and your ability to start over.  Once you walk away from that debt and start over, there is nothing to hold you back.  There are no limits to the successes you can achieve in the future, no longer chained to the past.

Common Myths about Bankruptcy

1.   Bankruptcy is for dead beats.

NO!  Most people I deal with are honest but unfortunate debtors.  They really want want to pay their bills.  But, with the loss of a job, lowered income, retirement, loss of a spouse, divorce,  or other financial issues, hard times can hit anyone.  Bankruptcy is a perfectly legitimate way of handling financial hard times - Congress enacted the Bankruptcy Code to give the honest but unfortunate debtor a "fresh start". 

2.   Bankruptcy is only if I am broke.

 No, bankruptcy can be a tool to keep your house, catch up on mortgage arrears when the bank won't work with you, a way to get rid of credit card debt or high medical bills, and in many instances a way to get rid of a second (or third) mortgage for which there is no equity.  In fact, in most of the bankruptcy Chapters (like Chapters 11, 12 and 13) you cannot be "broke" and you need sufficient income or assets to make your plan payments.

In Chapter 7, you may be without income or assets.

3.   Bankruptcy will take way all of my assets.

NO!  The Bankruptcy Code has a schedule of exemptions, which allow the debtor in bankruptcy to reasonably keep his or her belongings.  (click onto my articles on "exemptions")

4.   I will never have good credit again.

 That is up to you.  Anyone can rebuild their life, their credit.  You need to pay your bills on time and only obtain the amount of credit you can handle. 

5.    Bankruptcy will make me lose my job. 
The most common answer is "no".

The Bankruptcy Code says that "no private employer may terminate the employment of, or discriminate with respect to employment against, an individual who is or has been a debtor under this title".  There are a few cases where an employer has been allowed not to hire someone because of bankruptcy status. The Code also says that "a governmental unit may not deny, revoke, suspend, or refuse to renew a license, permit, charter, franchise, or other similar grant to, condition such a grant to, discriminate with respect to such a grant against, deny employment to, terminate the employment of, or discriminate with respect to employment against, a person that is or has been a debtor under this title."      

Ask yourself, have you ever met a person who got fired or not hired for filing bankruptcy?

6.   All debts are discharged in bankruptcy.

Most are discharged, a few are not - (click onto my articles regarding "discharge").

7.   The IRS will never go away.

Well, depends on how you look at it.  Stale taxes, meaning most income taxes that are many years old, may be discharged - this requires a closer look to make a determination.

8.    Once I file for bankruptcy, I can never file again. 

Incorrect! click onto my article under "bankruptcy" regarding "timing". 

Am I a failure because I filed for bankruptcy protection?

Will people think poorly of me because I did so?  A question that often bubbles to the surface in client meetings, even if never asked, it is there.

Inflation, rising property taxes, trying to help the kids, well you know what's next - use the credit cards to make ends meet.  Then there are the school bills, kid's activities, medical bills, and you have run out of money.  Retirement is no longer the "golden years" because social security payments just don't cover the bills.

There are a lot of reasons people need protection under the bankruptcy code, one of the most important being people just do not want to lose their home and they don't have to, because bankruptcy gives them a way of staying in their home and catching up on past due mortgage payments, while ridding themselves of credit card debt.  Bankruptcy, because of the "exemptions", (please read my blog article on exemptions) allows you to keep a reasonable level of assets, which in most homeowner’s cases is all of the assets they have.

When you decide to address your difficult financial position, you succeed.  The solution may be a credit consolidation loan, or it may be a loan modification program with the lender who holds your home mortgage.  You may use Chapter 13 of the bankruptcy code to catch up on your overdue car and home loan payments.  In any event, when you face the problem and decide to find a solution, you are never a failure.  Sometimes, bankruptcy is simply the answer.

You have decided that you will control the outcome of a difficult situation, rather than letting it control you.