Falling for bankruptcy myths could block you from getting the big benefit of a fresh start provided by support from a FL bankruptcy law firm. Read on to learn more about seven of the most common myths and what you can expect. If you’re ready to talk through filing, set up a time to meet with an attorney from our FL bankruptcy law firm today.
1.- You Can Get Rid of All Student Loans
Presently, all student loans are non-dischargeable, meaning that you’re unlikely to wipe them out in bankruptcy. However, there is a new program that has been instituted in the Southern District of Florida as of May 3, 2021, which allows you to negotiate with your student loan creditors to reduce your monthly payments. It might also allow you to have the student loans forgiven within ten years.
You will have to make payments as little as $0 per month. This is an income-based program run through a bankruptcy system when you file a Chapter 13 bankruptcy. A similar program has been ongoing in the Middle District of Florida since 2019. Every year you must show your income and expenses to the company who is in charge of the program that consolidates the student loans. Your payment may be adjusted every year depending on your ability to pay.
Also, Senator Elizabeth Warren is proposing an amendment to the bankruptcy code which may make student loans dischargeable. However, if this does happen, it will probably not take effect until the summer of 2022. It is just in the proposal stage now, so we will not know what types of student loans will be affected by this bill, if any.
2.- You Can Only File Once
There is no limit on how many times you can file for bankruptcy. There are time restraints though. For example, if you have received a discharge in a Chapter 7, you cannot file another Chapter 7 until eight years have passed since the first filing. You could, however, file a Chapter 13 immediately after the discharge of the Chapter 7 to deal with other debts you may have which are not discharged in the Chapter 7. This is often called a Chapter 20.
3.- Extra Spending Right Before Bankruptcy Gets Combined with Other Dischargeable Debts
If a bankruptcy is filed and you have made significant charges just prior to the filing of the case, your case, you could be sued in the Bankruptcy Court for an attempt to hinder, delay or defraud your creditors. These lawsuits are rare, but it is also rare that someone will make significant charges on a credit card just prior to filing a bankruptcy.
4.- It Takes a Long Time
Bankruptcy does not take a long time from beginning to end. For a Chapter 7, it takes between five to six months to get your discharge. Chapter 13 is more complicated. The minimum time period is three years, but most cases take five years. The longer the payment plan, the lower the plan payments are.
5.- It’s Hard and Expensive to File
Bankruptcy is not a difficult process as long as you bring your lawyer all the paperwork necessary to file the bankruptcy. There is a significant amount of paperwork that is required to file, and a list will be given to the client once they decide that bankruptcy is right for them. The difficult work is for the lawyer. However, an experienced lawyer will be able to make the process very easy for the client.
Attorney fees are regulated by the courts in bankruptcy. Lawyers are usually very expensive, but our firm will allow you to make payments until the fees and costs are paid. During this time, you will be compiling the paperwork necessary to file, and if creditors are calling and harassing you, we will take the calls to inform them to stop contacting you.
6.- You Won’t Be Able to Keep Any of Your Belongings
In Florida, if you live in your home, you are allowed to keep $1,000 worth of personal property and $1,000.00 in equity in a vehicle. If you don’t live in the home, you are allowed to keep $5,000.00 in personal property. You also get to keep 100% of the equity in your home. There are many other assets that you are able to keep such as cash surrender value in your life insurance, or your Federal Retirement. When you speak to one of our lawyers, we will be able to let you know what assets are not at risk to be taken from a Chapter 7 Trustee. In Chapter 13, all of your assets are protected. No one can take them. However, you must pay your creditors over 3-5 years the value of the property that is not exempt.
7.- Your Credit is Ruined for Life
Your credit report is like a report card. When you are behind on your credit cards, mortgage, or car payments, that is equivalent to having F’s on your report card. A bankruptcy is another F. However, after you file for bankruptcy, you can begin to re-establish your credit immediately. Our lawyers will explain how to re-establish your credit. Within two years, your credit may be over 700. In order to get a conventional loan on a house, you will need to wait two years after you get a discharge, but once the bankruptcy is over, you will be able to get credit cards and car loans easily. Just don’t spend more than you are able to repay or you will be back in the same position you were prior to filing for bankruptcy. You should never pay less than the full payment on a credit card if you can avoid it.
Need support for your bankruptcy filing? Reach out to a FL bankruptcy lawyer today to learn more. Our FL bankruptcy law firm is here to support you.