The fear of losing everything is a very real concern for those contemplating bankruptcy. However, this is one of the most common bankruptcy myths, and can keep individuals who are drowning in debt from obtaining a fresh financial start.
To make the bankruptcy process a little easier to understand, we have dispelled the top three fears people have when filing for bankruptcy.
- Never Qualifying for Financing, Again.
Many potential bankruptcy filers worry they will not be able to qualify for financing in the future after filing, including getting approved for a mortgage or a car loan. While a bankruptcy case can lead to a drop in the person’s credit score, it can be rebuilt with good financial habits. Borrowers can qualify for FHA or VA loans one year after completing a Chapter 13 bankruptcy case or two years after completing a Chapter 7 bankruptcy case, meaning it is possible to purchase a home after bankruptcy.
- Losing Everything.
Many filers fear that they will lose their home, cars, and all of their personal property once they file for bankruptcy. In reality, in just under 10 percent of all personal bankruptcy cases do the individuals filing have to turn over any property for liquidation to a bankruptcy trustee. For the most part, property is protected under one of the many bankruptcy exemptions available. Florida offers some of the most generous ones available to consumers, allowing them to keep a great deal of their property throughout the duration of a bankruptcy case. In addition, residents are provided unlimited exemptions for homestead, annuities, and the cash surrender value of a life insurance policy. Most filers are also able to keep their vehicles after filing for bankruptcy.
- The Fear of Judgment.
No one wants to be on the receiving end of criticism or judgment from family members or loved ones. Many people hold off on filing, believing that their case is a sign of failure and will become public knowledge to everyone who knows them. While bankruptcy cases are public court records, for the most part, none of the information within the case is publicized. Only the filer’s creditors receive notice of the filing and select government agencies. Otherwise, unless the filer personally tells others about the case, they will never know about it.
The truth is the stigma against those who file for bankruptcy has greatly decreased over the last 20 years, and there is no indication that people will be treated less favorably after filing for bankruptcy. In fact, it is oftentimes easier to reestablish your credit after filing for bankruptcy, because you are essentially given a “clean slate.” Making the decision to file for bankruptcy can be a difficult one but having the right bankruptcy attorney in your corner can make the process a seamless one.
If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.