Don’t be Afraid of Bankruptcy
By Stephen Otto, Pennsylvania Bankruptcy Attorney on Aug 31, 2007 in Bankruptcy Myths, Benefits of Bankruptcy, Chapter 13 Bankruptcy, Life After Bankruptcy, Your Bankruptcy Attorney & You
“Don’t be afraid of bankruptcy.”
So says John Rosevear, a contributor to The Motley Fool, a very popular and highly regarded investment advice website.
John rightly recognizes that consumers who choose to file for personal bankruptcy are not typically deadbeats. Rather, they are people who have suffered through difficult divorces, have incurred medical bills, or who have suffered some kind of financial misfortune. They also may have simply been the victims of overreaching credit card accounts.
In his article, John does a fairly decent job of summarizing the differences between Chapter 7 and Chapter 13. However, he does neglect to mention a very important aspect of Chapter 13, namely that this form of bankruptcy may be an extremely effective tool at staving off mortgage foreclosure, tax sales, automobile repossessions, and other forms of forfeiture by virtue of the power of the Chapter 13 Plan which can be used to create a Court-enforced payment plan to cure any arrearages which threaten to separate you from your precious home, vehicle, etc.
John goes on to mention that bankruptcy is often unjustly maligned by its critics. For example, critics of bankruptcy will often argue that bankruptcy is a horrible decision because it will destroy your credit. This is simply not true. Others argue that bankruptcy is innately immoral. False. For an extensive list of “bankruptcy myths”, click here.
John’s suggestion for preparing to file is prudent. You will almost certainly need your most recent federal and state income tax returns (make sure you are current with your filings), all of your paystubs from the previous seven or so months, statements from important creditors like your mortgage lender and your automobile lender, and recent credit reports. John’s advice about finding the right attorney is also very important. Finding the right lawyer is one of the primary reasons that Bankruptcy Law Network exists.
In summary, you should by no means by afraid of bankruptcy. If you are, it is most likely because you are the victim of misinformation.
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