Bankruptcy Myths

Southern California Bankruptcy Attorneys

If you are an individual or small business owner who is considering bankruptcy, you have probably heard many negative things about it. Often, what you hear are misleading and misinformed statements from people who are not well-versed in bankruptcy law. That is why it is strongly urged that you consult with a Southern California bankruptcy attorney at Fransen & Molinaro to get the straight facts based on your financial scene from someone who has years and years of experience dealing with bankruptcy cases. Whether you are an individual with runaway unsecured debt looking for a Chapter 7 or a business-owner who needs to save his company through a reorganization plan with a Chapter 11, a Southern California bankruptcy lawyer at our Corona offices can provide you with the guidance and counsel you need. In the meantime, here are a few of the common misconceptions regarding bankruptcy.

If I file for bankruptcy, I will lose everything.

Most bankruptcy cases that file under Chapter 7 are a "no-asset" case, which means that the debtor has claimed everything they own as an exemption to the bankruptcy estate. No assets remain from which to pay creditors. Debtors are allowed to keep the means of day-to-day living, including household goods, tools of the trade, and personal effects, as well as pension plans, and 401(k) plans. For specific help with exemptions to California bankruptcy, it is important to discuss your situation with an experienced Southern California bankruptcy attorney at the firm.

If I file for bankruptcy, my credit will be irreparably ruined.

If this were true, no one would file for bankruptcy. If you are in a deteriorating financial situation where you have defaulted on accounts, your credit has already been substantially hurt. Filing for bankruptcy will end the stress of trying to deal with a hopeless situation. And though the bankruptcy may remain on your credit report from 7 to 10 years, you can begin rebuilding your credit immediately. If you retain your mortgage or car loan, prompt payments on those will help to restore your credit score as will payments on any credit card you retained. Certain financial institutions offer secured credit cards to those who have declared bankruptcy as well. Within 2 years after your bankruptcy, you may be eligible for loans, as long as you keep building your credit-worthiness.

If I file for bankruptcy, everyone will know.

Only those to whom you owe money will know that you filed for bankruptcy. Newspapers stopped publishing bankruptcy filings long ago. Anyone who would want to know if you filed would need to know your social security number and research public records to find out. Unless you're a celebrity or public figure, the chances of that happening are slim.

Filing for bankruptcy is an admission of failure.

Most people who file for bankruptcy do so as a last resort after exhausting all their other options. The decision to file for bankruptcy is generally caused by such events as the loss of a job, reduced hours or wages, a costly divorce, illness, or accident or other unfortunate events beyond the debtor's control. The U.S. Bankruptcy Code exists to help those who face insurmountable debt with no foreseeable way of recovering.

You must have a minimum amount of debt to file for bankruptcy.

This is not true. Per the state and federal bankruptcy laws, there is no minimum of debt necessary to file.

To learn more about bankruptcy and how it can help you, contact a Southern California Bankruptcy Lawyer at the firm now!