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Bankruptcy Myths

At Boyd Law we understand that people suffer from overwhelming debts due to circumstances that are sometimes outside of our control or you did not foresee coming such as medical expenses, a lost job, or reduced income. It can be stressful to receive harassing calls from creditors, garnishment of your wages, vehicle repossession or the possible foreclosure of your home. When a person is stressed out over finances and debt it can be hard on a marriage or relationship and even your physical body.

The law provides that people in certain circumstances can have a second chance by filing for bankruptcy. Understanding the process of bankruptcy and knowing what to expect can alleviate your concerns about filing for bankruptcy. Speaking with one of our bankruptcy attorneys will allow you to make an educated decision about dealing with your debt situation. Here are some common myths, misconception and questions regarding bankruptcy with accompanying explanations.

1. I make too much money to file for bankruptcy. I make too much money to file for bankruptcy.

There is a two step process to determine if you are eligible to file a Chapter 7 bankruptcy. First, do you make less than the federal median set for the State in which you live based upon your household size? If you do make less than this number, that is good news! If you make more than this number, do not be alarmed, there is a second step that we can conduct in order to see if you are eligible to file for a chapter 7 bankruptcy. After plugging in the formulas and some of your specific expense information, you may be eligible. If you do make too much money to be eligible to file for a Chapter 7 bankruptcy, there is still an option that a Chapter 13 bankruptcy could help you. In a Chapter 13 case, you make monthly payments to your creditors under a Chapter 13 Plan after that plan is confirmed (approved) by the Court. A chapter 13 plan could allow you to save your home, save your assets, and could eliminate a large percentage of your unsecured debts such as credit cards, personal loans medical bills.

2. Changes in the Bankruptcy code have made it impossible to qualify.

Not true. If you are having financial difficulties contact us to see if you qualify for bankruptcy. We look to see which type of relief is available and appropriate for your situation.

3. I will lose everything if I file for bankruptcy.

Not true. The Bankruptcy Code allows for exemptions. To understand exemptions, picture a row of wooden buckets, with each bucket has a label on it. The labels read: vehicle, jewelry, clothes, home, wild card, you get the idea. We put your assets into the bucket that the asset matches; your car goes into the vehicle bucket, etc. Each exemption bucket also has a dollar amount. As long as your assets legitimately fit into the corresponding exemption buckets, then you get to keep the assets. If your assets are too big and they spill out or pour over the side of the exemption bucket, then the Trustee can take the exemption that spills out. There are actually 2 rows of exemption buckets under CA law, called 703 and 704, under the California code. We have to choose which row of exemption buckets we are going to use, we can’t cherry pick buckets from each row. In many cases, because of the exemptions that are part of the Bankruptcy Code an individual can keep his or her home, car, furniture, household items, and retirement. Boyd Law’s attorneys can advise you regarding the best way to maximize your exemptions under the law. Contact us for an initial consultation so you can determine if your assets properly fit into the exemption buckets.

4. If I file for Chapter 7 bankruptcy, will all my debts be wiped clean?

In a Chapter 7 bankruptcy filing, much debt can be discharged, including credit card debt, medical expenses, and more. However, it is important to understand that certain types of debts cannot be erased or are very difficult to be erased. This includes child support, alimony, government-issued student loans, legal settlements an individual’s been ordered to pay, taxes owed to taxing authorities, and debts incurred as the result of fraud. This is why you should speak with an orange country family attorney prior to filing chapter 7 bankruptcy. We can help you to determine if your goals would be met through a Chapter 7 filing.

5. I will have bad credit and cannot reestablish credit for 10 years.

Not true. It’s true that filing for bankruptcy will stay on your credit report for 10 years, but it doesn’t mean you won’t ever be able to borrow or qualify for a loan again. The best way to recover from bankruptcy is to gradually start rebuilding your credit. There are options that can help like making monthly payments towards any debts on time, making payment towards your vehicle, and or getting a secured credit card.

6. Will my spouse have to file for bankruptcy too?

No, although spouses may file together you can file as an individual. We will analyze your situation and recommend the best course of action for you and your spouse.

7. It is irresponsible to file for bankruptcy.

Not, true. Financial difficulties that are often out of our control such as divorce, illness, losing a job or home cause most people to file for bankruptcy. While we always prefer to be able to pay our debts, sometimes that is just not possible. It is important that you take care of your marriage, your family, and your physical and mental health.  Bankruptcy issues can lead to devastating family issues, such as divorce, domestic disputes and legal separations. Bankruptcy can help individuals and their families get out from under debt and back to becoming financially productive members of society. Bankruptcy is not always the answer, but for some it may be the responsible thing to do.

Contact our Orange County Bankruptcy Lawyers

Debt can be overwhelming and it is challenging to go it alone. The Orange County divorce attorneys at Boyd Law understand the bankruptcy process and can advice you regarding your best options. We dedicate ourselves to understanding and achieving your goals. To learn more about your bankruptcy needs and to speak to an attorney, contact us online for a free, no-obligation consultation or call (949) 753-1028. Pursuant to 11 U.S.C. section 528(a)(4) of the bankruptcy code, we are required to state: we are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.