Duluth and Gwinnett County Bankuptcy lawyer

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Duluth and Gwinnett County Bankuptcy lawyer

Bankruptcy Facts vs. Fiction/ Bankruptcy Myths Busted

 

The most common bankruptcy myths are broken down by Attorney Keith Cornwell. Included in these are those debt tall tales that create such fear among those individuals applying for bankruptcy.

 

Myth: It is TOO LATE to file for bankruptcy, if a creditor has SUED you.

 

Truth: Bankruptcy will put an immediate STOP to a foreclosure, lawsuit, levy and/or wage attachment, and a sheriff sale. The Automatic Stay of the Bankruptcy Code, under section 362, is a very powerful provision. All of a debtors creditors are directed to cease all collection activities, by this Section of the Bankruptcy Code. In this section of law, there is very little exception, or "wiggle room," meaning that a judgment collection or lawsuit is literally stopped in it's tracks by it.

 

Myth: After bankruptcy, you will never again get any loan.

 

Truth: Many past clients, immediately after the case has been completed, have been offered deals to finance cars and other substantial items. A debtor's debt-to-income ratio is obviously greatly improved, once a bankruptcy case has been completed. In other words, post-bankruptcy debtors are in a far greater position, having much more disposable income available to them, to be able to borrow and finance responsibly. This available credit is available to rebuild, MUCH FASTER to bankruptcy debtors, than you might think it is.

 

Myth: After the 2005 law changes, it is more difficult to file bankruptcy.

 

Truth: The 2005 Bankruptcy Code changes truly did not have the effect intended by the United States Congress happen. Most of the laws continued to operate in the same manner as they did pre-2005. The "new laws" were geared to prevent bankruptcy abuse, and drafted to prevent fraud changes. That relief which was available before 2005 is however STILL available. After the law was changed, the "qualifying factors" surrounding a bankruptcy, really did not change very much at all. Those rumors regarding changes in the 2005 law are still existing today. It is so vitally important, that before you make any critical decisions regarding bankruptcy, that you get all the accurate information you can!

 

Myth: Before filing for bankruptcy, you should cash in your retirement plan or your 401K.

 

Truth: In bankruptcy, retirement funds are protected, or "exempt". There is no "limit" to that exemption, meaning that as long as they stay in the retirement account, the debtor can retain those funds. If you decide to prematurely draw on those funds in order to pay your creditors, it can and will:

 

  1. Have serious ramifications in regard to your income taxes and
  2. Place your financial future in peril. Since taxes and penalties have to be paid on withdrawals, pulling retirement funds out can be a very expensive road to travel.

 

So many who choose to do so are totally stunned at the year's end just how much tax they owe, creating still another headache, and this one with the IRS. Financial planning for your future is even more important today than ever before, with the Social Security future in so much jeopardy today.

 

Myth: You cannot afford to consult with an attorney.

 

Truth: Initial consultations are at absolutely NO COST to you. Payment plans are provided for just about everyone, by attorney Keith Cornwell, including those individuals that are on a fixed income. Over the past years, Gwinnett County bankruptcy attorney Keith Cornwell has worked with literally thousands of clients in regard to bankruptcy, Chapter 7, and Chapter 13, and he has done whatever possibly might be done to assist clients with handling their legal fees.

 

Myth: The bankruptcy filing of one spouse, when married, will ruin the credit of the other spouse not filing.

 

Truth: The Bankruptcy Code, fortunately, permits one spouse to file for bankruptcy, without the other spouse needing to join in the proceedings. Thus, individual debt can be eliminated by the filing spouse, and there will be no effects felt on the credit of the non-filing spouse. In this scenario, however, joint credit cards may create some issues. This situation would have to be carefully examined by an attorney. In addition, an individual that applies for bankruptcy before their marriage takes place, is not going to affect the new spouse's credit at all.

 

Myth: To file for bankruptcy, you must be behind on your bills.

 

Truth: You really are not "fine," even if you are maintaining the minimum payments due on your bills. You really are being set up to fail by the Credit Card companies. One of the problems with this is that by the time one realizes they are in a "credit trap", it is often too late for them to recover from it.

 

Myth: To file for bankruptcy, there is a debt "minimum" that is necessary.

 

Truth: The truth is that to file for bankruptcy, there is NO debt "minimum" at all.