Filing for bankruptcy doesn’t necessarily mean that someone is ‘flat broke’. In fact, the laws have been revised to give more flexibility to the people in terms of getting their finances in order. While it’s never an easy decision to go into bankruptcy, it can relieve you of the huge stress of being unable to pay your debts (not to mention fear of losing your property).
Bankruptcy laws are broad and complex, BUT there are a few interesting things about it that could help you look at bankruptcy in a new light. Here are a couple of them:
1. Bankruptcy Can Protect You
For people who have experienced being dogged by creditors, it can be a real pain. Aside from constant phone calls and letters, there’s the anxiety over losing your home, your car, and your valuables. Bankruptcy isn’t just a financial issue – it’s also a mental and emotional one. However, it can also be your biggest relief.
For one, filing for bankruptcy gives you the Automatic Stay. This immediately stops creditors from suing, harassing, and collecting from you. If you are due to be evicted, filing for bankruptcy can allow you to keep your home (as long as it’s filed on time). Plus, with your debts about to be discharged, you can finally breathe easy.
2. Certain Taxes Can Be Discharged
Depending on state and federal laws, there actually certain taxes which can be discharged once you file for bankruptcy. One would be personal income tax that are more than three years old.
3. You Can’t Play Favorites on Creditors
Once you file for bankruptcy, you need to list EVERYONE you owe money to. Yes, including friends and family. If you exclude them because you feel guilty not paying them back, this will be considered as fraud by the court and you may lose the discharge – or worse, go to jail. You don’t need to worry about money you owe to friends or family because you can still pay them with a reaffirmation agreement. If approved by the court, you can slowly pay back debts from certain creditors to maintain good standing.
4. It’s Possible To Get More Credit Card Offers…
Sounds unbelievable? Imagine this scenario: two credit card applicants are being considered by a bank. One has no bankruptcy record on his file, but the second one just filed for it two months ago. Which do you think will get the approval? Most likely, the bank will consider Applicant #2 because he cannot file for bankruptcy again for the next several years. Unlike Applicant #1 who has never had a bankruptcy petition – who knows when he might file for one?
5. …and Even Buy a House!
It’s a common misconception that people who filed for bankruptcy will never be trusted again. It’s actually up to lenders’ discretion if they want to take a risk with you. The only downside here is, if they allow you the mortgage, you will undoubtedly have higher interest rate (and will possibly need to provide a personal guarantee). But yes, you can still get your dream house even after filing for bankruptcy.
6. You Can Keep Your Job
Employees cannot be terminated because they just filed for bankruptcy. If this happens, feel free to sue your employer. However, in the event that you apply for a new job, your bankruptcy may become a deciding factor for hiring you. So be sure to make a good impression. And if you’re still staying in your current job, do well and maintain good relations.
Feel free to contact Montgomery Alabama Bankruptcy Attorney for more bankruptcy information.