Bankruptcy Myths

Denver Bankruptcy Attorneys

Myth 1: I must be completely broke to file for bankruptcy - Not true. If you are unable to pay your mortgage and your credit card bills or are having trouble paying the minimum monthly balance on car loans, medical bills, or credit cards, it may be time to consider Chapter 7 or Chapter 13 bankruptcy.

Myth 2: I can only file if my accounts are past due - Not true. A variation of the first myth, you don't have to wait until you are behind in your payments on loans, credit cards, or your mortgage to file for bankruptcy.

Myth 3: Only irresponsible people file for bankruptcy - Not true. Job loss, illness, or unexpected financial events can create a snowball effect that leads to bankruptcy. Mark Twain, Abraham Lincoln, Walt Disney, even Donald Trump all filed for bankruptcy at some point in their lives.

Myth 4: My credit score will be damaged forever - Not true. While your credit will be negatively affected at first, clearing it of delinquent accounts and unpaid balances will help you in the end.

Myth 5: I'll never qualify for a credit card or loan again - Not true. It's not unusual to receive solicitations for low balance, high-interest rate credits cards in the months following your bankruptcy. Even if you don't receive a credit card solicitation, you can apply for a secured credit card if you have money to deposit as collateral. If you make your payments on time and don't default on your accounts, your credit score will begin to improve. After establishing a history of timely, responsible payments, you will qualify for different kinds of loans and bigger lines of credit.

Myth 6: I'll have a hard time finding a job - Whether or not you can find a job will depend on your work history, education, skills, and the job market. Filing for bankruptcy won't prevent you from being hired. While some employers run credit checks now, not all do. And, even if your prospective employer runs a credit check, there's no reason to believe you'll automatically be disqualified as a job candidate.

Myth 7: I should max out my credit cards before bankruptcy - Not true. Large purchases in excess of $550 90 days before filing for bankruptcy are not eligible for discharge. Additionally, if the court believes you are trying to commit fraud, you could face denial of your bankruptcy discharge.

Myth 8: Using a debt settlement company is better than bankruptcy - Debt settlement companies don't have the legal power to force credit card companies to negotiate or wipe out your debt. Debt settlement companies charge upfront fees and cannot remove delinquent accounts from your credit report.

Myth 9: I can cash in my 401k and pay off my debt - If you cash out your 401k you will pay a 20% tax upfront and another 10% later when you file your tax returns. Additionally, assuming your 401k will continue to increase in value, your total lost earnings could exceed what you owe on credit cards now.

Myth 10: I'll lose my house if I file for bankruptcy - Not true. In fact, bankruptcy will place an automatic stay on your bank, halting any foreclosure actions against you. If you are able to pay your monthly mortgage after filing for a Chapter 7 bankruptcy, you can stay in your home. In fact, filing for bankruptcy should make it easier to pay your monthly mortgage.

Contact Denver, Colorado Bankruptcy Attorneys at Mile High Bankruptcy

Bankruptcy can help you regain control over your financial situation while ultimately saving you thousands of dollars. If you're not sure whether bankruptcy is right for you, contact Denver, Colorado bankruptcy attorneys at the law office of Mile High Bankruptcy, PC, today to schedule a free consultation and discuss your case.

Bankruptcy Myths and Facts

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