Last time, I listed a few common misconceptions about bankruptcy that I have heard from clients. As promised (I know it was difficult to wait), here are a few more:
“I know I can’t file on taxes/medical debt/credit cards/student loans/etc.”
Fact: There is no such thing as “filing on” any creditor. While some debts will survive the bankruptcy (aka, are not dischargeable), they must still be listed in your paperwork. Student loans will likely not be discharged, but some taxes may be. Medical debt and credit card debt is usually dischargeable. Your bankruptcy attorney can tell you which of your individual debts may not be discharged.
“If I file for bankruptcy, I’ll never get credit again.”
Fact: You will likely get credit card offers within six months of filing bankruptcy, though I recommend you live on a cash-only basis for awhile after bankruptcy. As a general rule of thumb, you should qualify for a vehicle loan within about 18 months of bankruptcy and a home loan within 4-5 years. The further you get from the bankruptcy filing date, the better your chance of getting credit, getting a better rate, and getting credit without a co-signer.
“Only deadbeats file bankruptcy.”
Fact: Most of my clients have tried to pay their bills for many months before coming to see me, often cashing in retirement savings or giving second mortgages on their homes. I have yet to represent the person who has intentionally lived beyond his means, purchased luxury items on credit, and planned to simply walk away from his debt obligations. See THIS POST for a description of the typical bankruptcy client.
If you have other questions about bankruptcy or debt-relief alternatives, let me know. I’ll either reply personally or post an answer here for others to read.