Debunking Bankruptcy Myths
A bankruptcy filing is often the best solution for individuals and businesses in trouble financially. Unfortunately, many people have misconceptions about bankruptcy and believe common myths.
Those who act on these myths could act upon incorrect assumptions, which can have serious financial consequences. Our Miami bankruptcy attorneys can help you to separate fact and fiction so you make informed choices about how to resolve your financial situation. Contact Leiderman Shelomith Alexander + Somodevilla, PLLC for immediate financial help.
Misconceptions About Bankruptcy Proceedings
Many of the myths about bankruptcy prevent people from getting financial help when they need it. Some of the common myths many people incorrectly believe include the following:
- Bankruptcy will ruin your credit. Repeated negative information being posted by creditors when you have unpaid debts and make late payments will drag your credit score down, as will court judgments, repossession, and foreclosure. Bankruptcy allows you to resolve your debts and stop the negative information from being posted monthly. You can then start to rebuild your credit.
- Bankruptcy means giving up all of your possessions. In the vast majority of Chapter 7 cases, individuals retain all of the property. Exempt property is protected from creditors. In Chapter 11 and Chapter 13 bankruptcy cases, a debtor is inherently allowed to retain his, her or its assets, and in return, pays a portion of their debts to their creditors..
- Bankruptcy means losing your house. In Florida, with very limited exceptions, an individual’s homestead is exempt from creditors. With regard to a first mortgage on a primary residence, while bankruptcy does not eliminate such mortgage debt, it is often possible to find a way to keep your house even when filing for bankruptcy protection. Bankruptcy can potentially eliminate junior mortgages and can help modify any mortgages on non-homestead property.
- Bankruptcy means shutting down your business. Businesses can often file a bankruptcy or insolvency proceeding, and continue operations in hopes of becoming profitable again. Consumer debtors who own businesses and who file for personal bankruptcy may also be able to retain their businesses.
- Bankruptcy is always a last resort. While you don't want to take a bankruptcy filing lightly, bankruptcy may be better for you financially then cashing in retirement accounts or taking out a second mortgage to try to repay debts. Cashing in retirement accounts or taking out a second mortgage may both put assets at risk that wouldn't usually be at risk of loss due to revolving consumer debt, like credit cards. There may also be substantial costs associated with a refinance or second mortgage or with withdrawing retirement funds.
The reality is that filing for bankruptcy is often the best solution when you cannot pay your bills, and the sooner you file the more quickly you can get on the path to a better future financially.
Getting Help from Fort Lauderdale Bankruptcy Lawyers
Leiderman Shelomith Alexander + Somodevilla, PLLC can assist consumers, creditors, and trustees throughout bankruptcy proceedings. We also help debtors to explore alternative debt relief options, optimizing solutions to your specific situation. Give us a call today to find out from our Fort Lauderdale and Miami bankruptcy lawyers whether bankruptcy is the best choice for your situation. We represent clients in cities throughout South Florida, including Fort Lauderdale, Hollywood, Pembroke Pines, and Coral Cables.