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For a person who is facing serious financial challenges, personal bankruptcy protection may be the best available option. Bankruptcy is complicated. There are a lot of misconceptions about the bankruptcy process and the long-term financial implications of a bankruptcy filing. At Resolve Law Firm, APC, we are committed to helping people solve financial challenges. We want to make sure that you have the knowledge and resources that you can rely on. Below, our San Diego bankruptcy attorney dispels five common myths about the personal bankruptcy process in California.
Myth #1: Bankruptcy is Always the Best Option to Deal With Serious Financial Challenges
False. There are certainly plenty of situations in which personal bankruptcy is the best path forward. With that being said, bankruptcy is absolutely not the right approach to deal with all types of financial challenges. It is crucial that you carefully evaluate your specific situation and your options. Bankruptcy might seem like a quick fix for financial woes—but the simple reality is that it is not suitable for everyone. It is a legal tool designed for those whose debts are so overwhelming to the point that they are insolvent and are likely to remain that way without help. For some people in San Diego with financial struggles, other options may be more effective. Before filing for bankruptcy, it is essential to explore all alternatives—from debt settlements to debt consolidation. A San Diego bankruptcy lawyer can help you explore all potential options.
Myth #2: You Lose Everything When You File for Bankruptcy Protection
False. While this is a very reasonable concern, it is simply not the case. Many people fear that filing for bankruptcy will strip them of all personal possessions. However, bankruptcy laws include specific exemptions that protect certain types of assets, including your home, automobile, and personal items from being seized. The intent behind these laws is not to impoverish you but to help you make a fresh start with the necessary resources. It is important to consult with your San Diego bankruptcy attorney who can help you understand how these exemptions apply in California.
Note: If you file for Chapter 13 bankruptcy, you will not have any assets seized. Instead, you can come to a multi-year repayment plan to resolve your outstanding debts.
Myth #3: A Bankruptcy Filing Does Not Provide Immediate Protection
False. As explained by the United States Courts, you are entitled to an automatic stay from the very moment that you submit your bankruptcy petition. All types of bankruptcy—Chapter 7 and Chapter 13 for personal bankruptcy and Chapter 11 for business bankruptcy—get the benefit of an automatic stay. Broadly defined, an automatic stay is a legal provision that halts creditors from collecting debts the moment your bankruptcy petition is filed. Along with other things, it stops harassment, debt collection calls, ongoing lawsuits, wage garnishment, and even foreclosures. To be clear, the automatic stay is temporary. The collection efforts do not stop permanently based solely on an initial bankruptcy filing. However, the automatic stay can help provide the breathing room that you need to organize your finances and determine the best approach for resolving issues.
Myth #4: A Successful Personal Bankruptcy Petition Clears All Of Your Debts
False. Indeed, it is a common misconception that bankruptcy erases all debts. Does a personal bankruptcy eliminate all of your debt? The answer is that “it depends”—but not all types of debts can be cleared through a Chapter 7 bankruptcy or a Chapter 13 bankruptcy. Indeed, you should not assume that bankruptcy will always get rid of every debt that you have without consulting with an experienced San Diego bankruptcy attorney.
While bankruptcy can discharge most unsecured debts—such as credit card bills and medical bills—some obligations remain unaffected. These include student loans, federal and state taxes, and child support payments. Further, secured debts—like a mortgage—run with the underlying property. The impact of a bankruptcy on a mortgage will vary. Though a bankruptcy can sometimes be the best strategy to save your home from foreclosure if you are underwater in San Diego.
Myth #5: It is Impossible to Rebuild Your Credit After Filing for Bankruptcy
False. While bankruptcy does impact your credit score, rebuilding your credit is entirely possible. In fact, a bankruptcy filing could potentially be the best path forward for repairing and rebuilding your credit over the long-term. A Chapter 13 bankruptcy stays on your credit report for seven years. A chapter 7 bankruptcy filing stays on your report for ten years. The adverse impact of that negative information will gradually decrease as time passes.
From there, the key to getting a good credit score after bankruptcy is adopting responsible financial behaviors. Among other things, this includes paying all bills on time, keeping low credit card balances on any existing accounts, and gradually taking on new credit obligations to demonstrate financial responsibility. Many people who file for bankruptcy in San Diego start to see big gains in their credit score within a few years after the filing.
Why You Can Depend on San Diego Bankruptcy Lawyer Le’Roy Roberson
Personal bankruptcy cases are complicated. You do not have to take on the challenges of the legal process alone. Our founder and lead attorney Le’Roy Roberson invests time, resources, and attention to detail into each and every case. Whether you are considering Chapter 7 bankruptcy, Chapter 13 bankruptcy, or you have questions about your options, we are available as a legal resource. Our San Diego, CA bankruptcy lawyer provides free, confidential initial consultations.
Set Up a Confidential Consultation With Our San Diego Bankruptcy Attorney
At Resolve Law Firm, APC, our San Diego bankruptcy lawyer goes above and beyond to protect the rights and interests of clients. We help people resolve serious financial problems. A brighter future is in reach. Give us a call now or contact us online to arrange a free 30 minute phone consultation. Our firm offers legal guidance and support to people and families in San Diego and throughout the wider region.
