5 Things Your Creditors Don’t Want You To Know About Bankruptcy!

27 Sep 5 Things Your Creditors Don’t Want You To Know About Bankruptcy!

1.  Bankruptcy doesn’t ruin your credit forever, as explained by Jay Fleischman, New York consumer attorney.   I am finding that about 20% of my clients’ credit scores suffer due to a bankruptcy filing, but those clients are in the high 600s or low 700s already.   Most of my clients’ credit scores are in the 500 range and bankruptcy actually helps boost their scores as the debt collector balances are zeroed post-bankruptcy.

2.  You don’t have to have a lot of debt to file bankruptcy, as explained by Dana Wilkinson, South Carolina bankruptcy attorney.   There is no minimum and no maximum amount of debt for a chapter 7 bankruptcy filing.   (As explained by Michael Doan, my California colleague, there is a maximum amount of debt for a chapter 13.)   Now, common sense kicks in at some point.    A minimum wage worker with $5000 in debt and facing a garnishment may be a candidate for bankruptcy; however, a person earning $100,000 a year  and $5000 in debt is not going to be given bankruptcy advice (at least by my office).

3.  All your friends and family will most likely never find out about your bankruptcy, as further explained by Steve Otto, a Pennsylvannia attorney.   99% of the time, the only way your friends and family find out that you filed bankruptcy is if you tell them.   A bankruptcy is public record but in these times, most newspapers do not publish bankruptcy filings.   If your friends and family are creditors, yes, they will find out as the court sends them a notice, but otherwise, the only folks who know about your bankruptcy are the ones involved in your debts or your bankruptcy.

4.  There is no such thing as  a medical-bill-only bankruptcy. as explained by Wayne Novick, a Ohio bankruptcy attorney.  While there are many bankruptcies that are filed after a significant illness or as the result of high medical debt, when you file for bankruptcy, you are required to list all your debts, both secured and unsecured, both private and personal.

5.   YOUR bankruptcy will not ruin your non-filing spouse’s credit, as explained by my colleague, Craig Andresen, Minnesota attorney.    Long ago, Congress passed the Equal Credit Opportunity Act.   You don’t have to have joint credit and you don’t have to file a joint bankruptcy.  Your bankruptcy will not appear on your spouse’s separate debts.   Now, your spouse remains liable on the joint debts and as long as payments are continuing to be made on those debts, your bankruptcy will not affect the spouse’s credit.   Most of the time, however, when there are significant  joint debts, attorneys recommend that both spouses file together in order that both can get the “fresh start” provided by the bankruptcy code.

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I'm a consumer protection lawyer in Oregon, working with people in Klamath; Lake; Jackson; Josephine; Curry; and Deschutes County. I speak regularly on bankruptcy and consumer protection issues nationwide.
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