Bankruptcy folklore and other tales of fantasy unmasked

Attorney Morton J. Grabel
Special to the Village News

Many people stay away from filing for bankruptcy because of inaccurate information they have received from friends, family, co-workers and the media. This misinformation usually stops people from seeking the assistance of a bankruptcy lawyer who can help them understand how bankruptcy can help their situation. These common concerns and myths have stopped many people from seeking the help of a bankruptcy attorney, but no longer.

First, can I keep my home if I file for bankruptcy?

If you are current on your mortgage payments and there is no equity in your home, generally you can keep your home when you file for bankruptcy. If you are behind in your mortgage payments then Chapter 13 bankruptcy may be available to help you catch up on your payments and keep your home.

Even when your home has equity, in most instances some, if not all, of the equity can be protected in a bankruptcy, and you can keep your home.

Can I keep my car if I file for bankruptcy?

If you are making payments on your vehicle, in most instances as long as you continue to make your payments on your vehicle and sign a reaffirmation agreement, you will generally get to keep your vehicle. If your vehicle is paid in full, in most circumstances the equity in your vehicle can be protected.

Will my credit be ruined for the next 10 years if I file for bankruptcy?

Although Chapter 7 and Chapter 13 bankruptcies can legally remain on your credit report for 10 years, this fact does not mean that your credit will be ruined for the next 10 years. Most people are able to get their credit score to a good level, after only three years.

Will my clothes, furnishings and household goods be taken away if I file for bankruptcy?

In the majority of cases, your household goods and furnishings will not be touched by the bankruptcy court or your creditors. These items are generally protected by California bankruptcy exemptions which stop creditors from using these items to satisfy the debts.

If I file for bankruptcy and get a discharge, will they be able to ask for payment in the future?

If you provided accurate and nonfraudulent information on your bankruptcy petition and obtained a discharge from the bankruptcy court, creditors cannot seek to collect on any debts that were discharged in the bankruptcy case, once the case is closed.

Will I be able to obtain credit after I file?

Most people have no problems obtaining a credit card after filing for bankruptcy. In fact there is an industry of companies that cater specifically to extending credit to people who have filed for bankruptcy.

Is it unethical or immoral file for bankruptcy?

Federal bankruptcy law was created specifically to help people in situations where they cannot afford to pay their debts back. There is nothing unethical or immoral about using federally established law to legally eliminate your debts.

I understand I will not be able to purchase a home if I file for bankruptcy?

Generally, most individuals who have filed for Chapter 7 bankruptcy are able to qualify to purchase a home after 3-4 years. In Chapter 13 bankruptcy, you will have to seek the permission of the court if the bankruptcy case is still pending.

I recently moved to California, do I have to file for bankruptcy in the state I moved from?

Federal venue rules allow you to file for bankruptcy where you have resided for the greater part of the 180 days before filing for bankruptcy. This rule means that you can have resided in California for as little as 91 days and file for bankruptcy in California.

Please note by reading the information above & herein, no attorney-client relationship has been created. The information provided herein is not to be relied upon as legal advice for your specific legal needs. Should you have legal questions, contact The Law Offices Morton J. Grabel in Temecula at (951) 695- 7700.

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