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.
Bankruptcy offers filers a fresh financial start, but for many bankruptcy petitioners, that start comes later in life. In the past three decades, the number of people over the age of 55 who have filed for bankruptcy has gone up significantly. This increase has many financial experts wondering why so many individuals nearing retirement are filing for bankruptcy.
According to a paper by Robert Lawless, the percentage of older Americans, specifically between the ages of 55 and 64, increased by 66 percent between the year 1991 and 2016. The number of bankruptcies filed by individuals between 65 and 74 increased by more than 200 percent between this time period. In fact, approximately 12 percent of all bankruptcy filers are over the age of 65.
While many people assume that people who file for bankruptcy cannot resist the temptation of using credit cards or are self-proclaimed shopaholics, most people who file for bankruptcy do so for other reasons. Below are some of the myths surrounding consumer bankruptcy filings:
1.) People who file for bankruptcy are financially irresponsible. Those who typically file for bankruptcy fall into three categories: they have either lost their job, are going through a divorce or suffering from a serious illness and have insurmountable medical debt.
2.) Bankruptcy discharges all past debts. Not all debts are discharged from bankruptcy. If you have domestic support obligations (i.e. – alimony or child support), those cannot be removed under any circumstances. If you have to pay restitution because of a crime, this debt cannot be discharged. Finally, as a result of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, student loan debts cannot be discharged unless you can prove undue hardship, such as a permanent disability.
3.) If you spend recklessly before bankruptcy, you will not be liable. Some people assume that just because they are getting ready to file bankruptcy they can go out and run up new debt. Courts have ruled this as fraud and it’s unlikely you will get away with this type of spending prior to filing bankruptcy.
4.) Bankruptcy permanently ruins your credit. People who file for bankruptcy are often surprised at how quickly they start accumulating credit card offers in the mail. In fact, usually in about six to twelve months you will be eligible for a regular credit card.
5.) Bankruptcy is a cure-all. Before filing, applicants are required to go to credit counseling, during which the counselor may explain other options like negotiating a payment plan with creditors. It’s important to take what you learn from this session so you do not make the same mistakes twice.
Click here to read more on some popular bankruptcy myths.
If you are in a financial crisis and are considering filing 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, P.A. 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 website at www.miamibankruptcy.com.
In 2011, Equifax reported that of the 585 million consumers and 81 million businesses, Americans’ delinquency debt rates were significantly declining in all areas but one- student loan repayments, which were at an increase of 1%. This is good news for the US economy, meaning that there is a decline in the amount of past due credit payments. Not only that, but there is also an increase in the number of credit cards issued by lenders to subprime borrowers (borrowers with credit scores below 660). In October of 2008, overall consumer debt was at its peak of $12.4 trillion. In October 2011, there was an 11% decline.
During 2011:
• Bank Credit Card payments 60+ days past due declined by 29%
• Auto Finance payments 60+ days past due declined by 19%
• Auto Bank payments 60+ days past due declined by 23%
• Consumer finance 60+ days past due declined by 23%
• First Mortgage payments 30+ days past due declined by 13%
• Home Equity payments 30+ days past due declined by 10%
• Retail Credit Card payments 60+ days past due declined by 15%
To read more on this story visit: http://www.marketwatch.com/story/us-consumers-paid-down-debt-on-time-in-2011-equifax-reports-2012-01-30?reflink=MW_news_stmp
If you are in a financial crisis and are considering filing bankruptcy, contact an experienced attorney who can advise you of all of your options. Since 1996 Kingcade & Garcia, P.A. 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, P.A. website at www.miamibankruptcy.com.
