Category Archives: Myths About Bankruptcy

What Does Bankruptcy Do To Your Life?

By Ryan C. Wood

What does bankruptcy do to your life? It helps your life and will give you your life back without the stress of not affordable monthly payments on your debts.  Bankruptcy will allow you to live in peace and harmony without the stress of not being able to eat and live.  Bankruptcy is the law, written by your Congress and signed into law and enforced by your President.   

Generally, credit card debts, medical debts, other general unsecured debts are discharged [no legal obligation to pay anymore by Federal Court order] and your life is left with expenses like rent, food, cellphone and other reasonable living expenses.  The entire point of seeking relief under the Bankruptcy Code is to improve your life and it does or no one would ever choose to file for bankruptcy protection.  What bankruptcy does to your life is making your life enjoyable again and obtain a fresh start.  This is why bankruptcy laws exist.  To help you have a better life and consequently improve society as a whole.  We need everyone happy. 

How Does Bankruptcy Give You Your Life Back?

First, the consequences of not filing for bankruptcy can be significant.  Bankruptcy gives you your life back by giving you the ability to get ahead in life again.  You will no longer be held back by debt your cannot pay back based upon your circumstances. 

Once you stop paying on time each month the phone calls and letters seeking collection start.  At some point one or more of the creditors will sue you and obtain a judgment given there is rarely a defense to simply not paying anymore.  That is a breach of the credit card contract.  Once a judgment is obtained the judgment can be enforced by garnishing your wages, levying on your bank accounts, and recording the judgment so the judgment attaches to your real property or real property you purchase later.  You just went from being able to file a more or less anonymous bankruptcy case to handle your debt problems to your employer, your bank and the county you live in finding out you stopped paying your bills and a judgment was entered against you.  Now that is a significant consequence.  Considering your credit score is already low given the missed payments and/or late payments your credit score will not go lower when filing bankruptcy.  The damage is done.  Considering very few, if any, humans will know you ever filed for bankruptcy how is filing a significant bad consequence as “they” want you to believe?  The truth is there is nothing wrong with following the law when filing for bankruptcy protection and discharging your eligible debts.

Very Few Bankruptcy Filers Ever Lose Property

This is again fake news and a myth passed on from human to human that is not a bankruptcy attorney and should not be giving out advice.  This is especially true in California given California has generous exemptions to protect or exempt your property from the bankruptcy estate.  In California the CCP 703 exemptions includes a Wild Card Exemption totaling over $30,000.00.  If your circumstances are right, yes, you can have $30,000.00 in cold hard cash and discharge all your eligible debts and keep the $30,000.00 in cold hard cash.  Under the 704 exemptions the California Homestead Exemption to protect equity in your home is up to $600,000.00 depending upon the median sale price of homes in your county in the prior calendar year. 

Bankruptcy Will Generally Not Ruin Your Credit

This is a myth like skin color matters.  These myths are passed down from generation to generation poisoning minds and limiting futures.  Skin color does not matter; money matters.  Just ask Will Smith.  See, if you have enough money, you can go around slapping anyone you like without consequence.      

Every now and then I run into a potential client that has not missed a payment yet but unfortunately knows bad things are coming.  When the bad things come, they will no longer be able to pay the credit card bills each month.  The vast majority, say 90 percent or more, already have month after month of negative history on their credit report when they seek the advice of a bankruptcy attorney.  The credit score is already as low as it will ever go.  Bankruptcy can only help that situation getting rid of all the debt so the debit to income ratio skyrockets and no more negative history is recorded in their credit report.  Thank you, bankruptcy law.

You CAN Buy A House Within A Reasonable Amount of Time After Your Bankruptcy Case

This is another myth.  Just Google it.  You become eligible for every form of mortgage loan 18 – 24 months after your bankruptcy case is over.  Bankruptcy never prevents or bars someone from buying a home.  Qualifying for the loan and coming up with a down payment are what prevent humans from purchasing homes.  Not a bankruptcy on a credit report.  That is nonsense. 

Why cure the debt cancer for ever when businesses, corporations can make billions merely treating the debt cancer?  No wonder “they” want you to believe bankruptcy is bad.  They are making money off you struggling each month and care nothing about your personal well-being.