Avoid Needless Anxiety and Get a Meaningful Fresh Start by Filing Bankruptcy

By Thomas McAvity

Managing Attorney

Phoenix Fresh Start Bankruptcy

There are so many falsehoods about filing bankruptcy floating around. And the worst thing is that if you buy into any one of them, you may never take the action to get the help that you need so that you can really start over. Starting over means getting back in the financial mainstream, not just eliminating debt, but getting a chance to participate again. It’s not just about stopping creditor calls and the worries.

Sure, eliminating the negative stuff is important but what about the good stuff like getting the car your family actually needs at an interest rate that doesn’t put you back in the poor house or renting where you want to rent or getting a mortgage that doesn’t kill you five years from now.

Your financial situation is likely taking more of a toll on you than you know. Most Arizonans who file with Phoenix Fresh Start Bankruptcy Attorneys knew that they were stressed out before they filed, but they had no idea how bad it was until the debt was removed as an issue in their lives. With all that said, let’s take a good look at 12 common falsehoods about filing for bankruptcy protection.

Falsehood #1: It’s Hard To File Bankruptcy Because Of The New Rules

The bankruptcy laws changed about fifteen years ago. For a long time, many people didn’t file bankruptcy because they thought that filing bankruptcy was no longer available. The fact is that while the laws have become far more complex than they once were, pretty much the same people who qualified for bankruptcy before the law changes still qualify now under the law changes. In fact, more than a million bankruptcies are being filed every year in the United States.

Falsehood #2: You Will Lose Assets Like Your House And Car If You File Bankruptcy

Luckily, thanks to protections under the Arizona laws, I can’t remember the last time one of my clients was remotely in danger of losing a home, a vehicle or any other valuable asset in bankruptcy

The reality is that if you have property that you are worried about losing, your attorney can review your situation and figure out the best strategy for maximum debt elimination and property preservation.

If you have too much equity in your home, you can always keep the home and pay back something to your unsecured creditors to obtain a discharge.

Bankruptcy can always help you keep your house and your car. In fact, filing bankruptcy can stop foreclosure in its tracks, bar a bank from repossessing vehicles and even get your car back if it has been repossessed.

Falsehood #3: I Can’t File For Bankruptcy Because of My Income

Many Arizonans think that they can’t file bankruptcy because they have consistent employment and make good money. Yet people just like you file bankruptcy every day. What matters is your ability to meet your financial obligations (i.e., debt payments) or not. The issue is whether you can actually afford to pay off your debts with the accompanying interest rates and penalties that would accompany them if you tried to pay them off on your own.

It is possible that you might not qualify for Chapter 7 bankruptcy, but even if you don’t, you should qualify for Chapter 13 which is cheaper up front to get filed and normally results in you paying back only a fraction of your debt interest fee with no hassle from your creditors.

The reality is that if you are considering bankruptcy, paying off your creditors on your own, factoring in interest and penalties included, with what you have left over every month after you pay your household expenses, is just never going to happen. It’s not a comment on your abilities, it’s just a math problem.

Falsehood #4: I Can’t Afford Filing Bankruptcy.

I get it, most firms in Arizona want every nickel of their legal fees before they will file your case. Nothing wrong with that except that you are left to deal with the stress and put off rebuilding when you could be ramping up back into the financial mainstream. Obviously, this is even worse for you if you have a garnishment, repo or foreclosure on the horizon.

I am proud to say that our firm is a place where this absolutely is not the case.

We split the fees up so that we file your case so that most of your fees are paid in monthly installments after your case is filed. Often we file cases with no money down. This way you start the process of starting over now rather than some undetermined date in the future.

Falsehood: #5: You can’t file bankruptcy more than once.

If you’ve filed bankruptcy before and you’re finding yourself in that same position again, don’t despair. Bankruptcy often happens more than once because the root causes of bankruptcy—divorce, health bills and job loss—are recurring events.

Take a look at these statistics:

  • More than 50% of marriages end in divorce
  • Unemployment has doubled
  • Millions of people have lost their jobs in the last few years
  • Medical bills are a leading cause of financial stress and millions of Americans are still without medical coverage

Don’t worry if you are finding yourself back in the same situation again.

You must meet specific criteria in order to file a second bankruptcy. If you meet the criteria, you are eligible to file again. The best way to find out is to call and let us look over your situation and give you the advice you need to make a great decision.

Many former filers are aware that they can only file Chapter 7 bankruptcy every eight years, but they forget that they can file a Chapter 13 and discharge their debts only four years after their Chapter 7 was filed. This often means paying back pennies on the dollar over a three year period while still eliminating all their debt. Let me repeat that: Paying back pennies on the dollar over a three year period and eliminating all your debt.

If you have fallen into debt even a year after filing bankruptcy, we can almost always find a way to make the bankruptcy code work for you.

Falsehood: #6: It’s Too Late To File Now.

It doesn’t matter if they have already sued you, we can stop the lawsuit in its tracks by filing a bankruptcy.

If the garnishment has already started, we can stop it and, better yet, we can often get you some of the money that has been garnished back in your hands.

We can do the same thing if they have already emptied your bank account,

In the same vein, if the repo man has already taken your car, we can often get it back, provided that we act quickly. If the foreclosure has started, we can often end it and make it so that you can keep your house.

The key here is speed. Do not be paralyzed by misfortune. Let us help you confront it and beat it down.

Falsehood 7: You Can Figure It Out Yourself

You got yourself into this mess. Shouldn’t you be the one to get yourself out it?

In most cases being a “responsible” person is a good thing. But when it comes to bankruptcy, this approach can honestly cause you way more trouble than you deserve.

The sad fact is that if this is how you’re feeling, you’re making your creditors EXTREMELY happy. They are almost literally laughing their way to the bank.

Working with creditors is harder than you think. Those calls you receive every day are really just the tip of the iceberg when it comes to how unpleasant working with them can really be. Ever wonder why working out payment plans with them that will actually result in pay off your debt is never something that they are interested in.

Most of our clients have tried repeatedly to work out settlement offers with their creditors…with little success.

The fact of the matter is that your creditors want you to stay in debt to them! They want to collect interest. They want fees to pile up. Your creditors are NOT your friends. And, yes, this applies to your credit union as well, it is not your friend either.

Plus, nobody bothers to mention the tax ramifications of settling your debts. Whatever debt your creditors do forgive can actually be considered taxable income to you! If you’re struggling to pay your taxes now, settling with your creditors can actually make that problem worse.

Sometimes being “responsible” means asking someone for help.

Falsehood 8: If I Can’t File Chapter 7, Chapter 13 Means Paying It All Back

There are two types of bankruptcy available for most Arizona consumers. Each one takes a different approach to solving financial problems.

Chapter 7 is short, quick and generally after three months, you walk away with all your unsecured debt discharged. Chapter 7 is what most of our would-be clients seek when they come to our offices.

In Chapter 13, you and your attorney work with your creditors to create a plan to pay back a portion of your debt while eliminating all of it and then set up an affordable payment structure over a 3 to 5-year period.

While the majority of people who come to our offices do so seeking a Chapter 7 bankruptcy, many of them ultimately opt to file Chapter 13. Sometimes this is because they don’t qualify for Chapter 7. However, many of them file Chapter 13 because it can accomplish goals that Chapter 7 can’t meet.

Under Chapter 13, you can often lower interest rates on cars and even reduce the principal owed. Borrowers who are behind on their car payments no longer need to worry after filing Chapter 13 because we are redoing the terms of the car loan in the Chapter 13 Plan.

Under Chapter 13, you can catch up on your mortgage interest-free over a long period of time, making continued homeownership a reality. You can also catch up on your tax arrears and back due child support, in the same way, interest-free and slowly. Suspended licenses are often returned only a day after filing because the tickets are now included in the plan.

I guess what I am trying to say is don’t get caught up on the differences between the two forms of bankruptcy. The only true way to determine which way is right for you involves speaking to a qualified bankruptcy attorney who can look over your situation and give you unbiased advice.

Falsehood 9: I Can File All By Myself

Yeah, you can file on your own. However, there are many detailed articles about how the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 made it almost impossible for an ordinary person, without significant legal training, to properly complete and file the necessary paperwork for filing bankruptcy.

One miscalculation, one form that isn’t filled out properly, or missing a single deadline can send all your do-it-yourself efforts spiraling downward toward failure. It can also cost you your house or your car.

A Chapter 7 bankruptcy trustee in Portland, Oregon once actually pulled a wedding ring off a self-filer’s hand at a 341 meeting in Portland and demanded to follow another self-filer home so that he could personally take away a second vehicle. In both cases, I am sure that the filer believed that she had a simple straightforward case.

Even when property isn’t lost, self-filers often arrive their hearings only to find them abruptly canceled with court instructions to redo or refile paperwork before coming back for a second or third hearing. Most cases that are dismissed are filed by self-filers.

The bottom line is if you are that person who does important electrical, carpentry or plumbing projects without any formal training on your own home and you are planning on giving your own bankruptcy a whirl, we aren’t going to be able to convince you otherwise. We sincerely wish you the best of luck.

Falsehood 10: My Credit Will Be Wrecked For Ten Years

This is the one that most people have been led to believe. It is just not true!

Two years after filing bankruptcy, you can qualify for a normal home loan with competitive interest rates if you keep your credit report clean and have the income to support the payments.

Chapter 7 bankruptcy stays on your credit report for ten years after filing and Chapter 13 bankruptcy stays for seven. Now, the reality is that you could have ten bankruptcies on your credit report, a triple homicide and a couple of fraud convictions, but if you have the right credit score, your credit report isn’t really going to matter.

Mortgage brokers and car lenders aren’t reading your credit report, they are checking your credit score. Your credit score starts recovering as soon as you get your discharge in bankruptcy. You will be happy to learn that we have stacked the deck heavily in your favor to make rebuilding quicker.

We pay a company to supply you with classes and educational materials to help you rebuild your credit score as quickly as possible. The service is provided to you free of charge.

They normally help people get back in the mid 700s well within eighteen months after discharge. The real question you need to ask yourself is where your credit will be eighteen months from now if you don’t file bankruptcy. This is part of our holistic approach of not just eliminating your debt but getting you back in the financial mainstream.

Final Thoughts

There is no way that I could answer every question or cover every situation in this article. The best way for you to get the most accurate information concerning your unique situation is to make an appointment today with me at Phoenix Fresh Start Bankruptcy Attorneys

You are under no obligation during this appointment and we can talk about your unique situation and help you determine the next step together. Remove the stress, worry, and doubt and speak to Us today. You will be glad you did.