During the 18 years of my bankruptcy practice, I’ve been asked many questions. Some questions have been routine, others more complex. Several questions are asked of me very frequently. These “frequently asked questions” are usually based on wrong information the person heard from a friend or family member who filed bankruptcy once or what they’ve heard from unreliable sources. In order to clear up some of the confusion about filing bankruptcy, I’ve listed the top four questions and have provide answers to each.
What is the most frequent misconception most people have about bankruptcy?
That filing bankruptcy means they are bad, are failures, or they should be ashamed. Gone are the days when we could shake hands with our lenders and work out friendly repayment terms after experiencing financial hardship. Today, the lenders don’t care about the individual experiencing financial difficulty they only care about receiving payments. People should understand bankruptcy relief was designed to provide a fresh start financially. It gives them a break, a chance to stop and take a deep breath, and move forward in getting back on their feet financially.
If a person files bankruptcy, is their property protected?
For almost all people, the answer is yes. The bankruptcy law provides a generous amount of exemptions. Exemption means we are taking their property and protecting it from the Bankruptcy Judge, the Trustee, and all their Creditors. When their property is exempt, it can’t be taken away. This means they can keep their home, keep their car and other property they consider important.
How does filing bankruptcy affect a person’s credit score?
It typically helps raise their credit score. In most cases, people see an average increase in their credit score from 50 to 70 points. A smaller percentage see an average increase in their credit score from 105 to 115 points. The reason for the improved credit score is twofold 1) the person is eliminating unsecured debts, like credit cards, medical bills, and signature loans, which helps with their debt to income ratio; and 2) they continue to make timely and consistent payments on their mortgage payments, or car payment, and this positive repayment history helps improve their rating.
What should someone do if they are unable to meet all their debt payments?
Be proactive. Call me and schedule a free consultation to discuss your options. Not making payments on debts leads to collection calls, lawsuits, creates the risk of lost property, and results in health issues from stress and anxiety. I’ve explained to many clients, Bankruptcy is a remedy that allows them to take charge by controlling the repayment of their debts instead of their creditors dictating how they want the debts repaid.
If you are thinking about filing bankruptcy, call me at 717-200-4357 to schedule your free consultation. We have convenient offices to meet and discuss your financial situation, including Chambersburg, Shippensburg, Carlisle, Gettysburg, Hanover, York, Harrisburg, Lancaster, and more. I will help you figure out the remedy that works for your particular situation.