The thing that people fear the most is that everyone will know they have filed for bankruptcy. The truth is that unless you’re a prominent person or a major corporation and the filing is picked up by the media, the chances are very high that the only people who will know about the filing are the creditors and the close friends. While it’s true that bankruptcy is a matter of public record, the number of filings is so massive that unless someone is specifically trying to track down information on someone, there is almost no likelihood that anyone will even know someone filed.
Another thing that people fear is that they will lose everything they have. The truth is that most people who file for bankruptcy don’t lose anything except the financial misery caused by their debts. While bankruptcy laws vary from state to state, every state has exemptions that protect certain kinds of property. In some states have exemptions to protect property such as house, car, household goods, IRAs, retirement plans, the cash value in life insurance, wages and personal injury claims.
In rare situations where one has more property than can be protected by available exemptions, one can file chapter 13 bankruptcy since it can even keep this property by paying a higher chapter 13 plan payment. If one wants to keep the property that serves as collateral for a loan, all they have to do is ensure they remain current on loan payments and have enough exemptions to cover any value above what is owed.
People who are thinking of filing for bankruptcy also fear that they might never get credit again. The contrary is true. Filing for bankruptcy gets rid of debt and puts the debtor in a position to handle more credit, making them look more attractive to potential creditors. One should be aware that the first potential creditors will want more money down and will want to charge higher interest rates. However, by making good financial decisions, one will put good marks on their credit report and improve the quality of their credit.
If you need answers to your specific situation, contact Mark Shayani of Pacific Attorney Group for a free, private and confidential consultation.