For all the facts available about filing for bankruptcy, there are just as many harmful myths that create confusion and stress for people in debt.
Queens, NY (PRWEB) February 22, 2013
For all the facts available about filing for bankruptcy, there are just as many myths that create confusion and anxiety for those facing growing debt. Queens bankruptcy attorney Bruce Feinstein, Esq. works with many clients each year who come to him with false information, so he decided to dispel five of the most common bankruptcy myths once and for all.
Myth #1: Bankruptcy Causes Me to Lose All My Property.
Bankruptcy is meant to help those facing financial hardship, so taking away all their assets would do more harm than good. Most people and businesses that file for bankruptcy lose their debt, not their property.
There are various exemptions in the bankruptcy code that will protect people’s assets during a Chapter 7 bankruptcy. These can include social security, unemployment, and – depending on how much equity they have – other belongings like their home and car. And people going through a bankruptcy in New York can now decide between both federal and state exemption options. This means that they have more choices when establishing their exempt assets for the court.
Myth #2: Everyone Will Know I Filed for Bankruptcy.
While major corporations’ bankruptcies sometimes make the front page, the chances that an individual’s bankruptcy will be picked up by news sources is very rare. While it's true that bankruptcy filings are public record, millions of people have filed for bankruptcy over the last few years alone, so unless someone is specifically looking for an individual's financial information, there is little chance his or her bankruptcy will be known unless s/he shares that information with others. Bankruptcy filings are also not indexed by Google and other search engines. In most cases, the only people who will know about a bankruptcy case are the person or business involved, their attorney, and their creditors.
Myth #3: Both Me and My Spouse Have to File for Bankruptcy.
In some cases it makes sense for both spouses to file jointly for bankruptcy – they may have a great deal of joint - or individual - debt. But this is not required by Ne York state or federal law. Every bankruptcy is unique, and sometimes it does not make sense to file jointly.
In some cases, one spouse will file for bankruptcy, and if the couple has problems making payments during a Chapter 13 restructuring plan, the other spouse will then file. Or, if the majority of debt is under one spouse’s name, that person may file in order to protect the other spouse's goo credit. If a person doesn't have don’t have joint debt with their partner, the other spouse's credit will not be adversely affected. And if he does, creditors cannot contact him or his spouse once he files; they are both protected by the“automatic stay” that kicks in at the start of a bankruptcy case.
Myth #4: I Cannot Discharge Back Taxes in Bankruptcy.
It is possible to get rid of federal and state back taxes during a bankruptcy. However, there are specific rules that define when this is possible and how much can be discharged. For example, certain kinds of taxes, like “trust fund” taxes, are not dischargable. Other kinds of taxes like certain federal taxes or property taxes can indeed be mitigated. And there are several deadlines that determine when back taxes can be dischargeable by law. So while it is certainly possible for people to get rid of back taxes, it is best for them to work closely with a bankruptcy attorney and the information provided by the IRS to make sure that they can get the most help out of their bankruptcy filing.
Myth #5: I Can Only File for Bankruptcy Once.
Bankruptcy is not a single use “reset” button. While it is meant to get people back on their feet, they may fall into debt again due to unforeseen circumstances like accidents or divorce. The reality is that people can file for Chapter 7 bankruptcy once every eight years. They can file again for Chapter 13 one year after their previous filing. And they can also file for Chapter 7 after filing for Chapter 13, and vice versa.
Bruce Feinstein, Esq. shares the truth about the bankruptcy process to make it clear that bankruptcy is not shameful or impossible. This information should also underscore the fact that bankruptcy is a multi-step, individualized process. You should consult an attorney like Queens bankruptcy attorney Bruce Feinstein, Esq. before making any significant decisions regarding filing for bankruptcy.
Visit the Law Offices of Bruce Feinstein, Esq. at bfeinsteinesq.com or call (718) 514-9770 to reach his New York office.