When we hear from clients seeking bankruptcy after they have drained their savings, retirement accounts and college funds, we often ask, "What took you so long?"
Orange County Chapter 7 Bankruptcy Attorney Vincent Howard of HOWARD LAW knows that often, the answer lies in the fear of the unknown. People worry that a bankruptcy will mean the end of their credit. There are still widespread myths that those with bankruptcy can't get a credit card, get a car or buy a home and that they face permanent financial ruin.
This is patently false.
But too often what we find is that people are afraid to have an honest discussion about how bankruptcy will actually affect you.
This is why we wanted to present some frank information about the consequences of bankruptcy in Orange County. It's not for everyone, but those who file should not worry that they have failed or made a dire mistake.
1. A Chapter 7 filing will remain on your credit score for 10 years, while a Chapter 13 will remain on your credit score for seven years. There is often a great deal of misunderstanding about what this means. Yes, you may be turned down for certain credit cards or for loans over a certain amounts during that time. However, it's not true that you won't be able to get any credit or loan at all. It's actually possible that you may be able to get a credit card right away. However, you may be paying a higher interest rate while you are rebuilding your score. This is why it's so important to plan ahead with a skilled bankruptcy attorney before you file. This will allow you to set up a solid enough foundation that will allow you to get by after you emerge from your filing.
2. If you work in the financial sector, it may be tougher to get a job after bankruptcy. Federal law actually does prohibit discrimination against applicants who have previously filed for bankruptcy. That said, there is case law that has established that a private firm may not be held to that standard. It's a fine line, but again, this is where solid planning comes in. If you can secure employment prior to filing, that may help you insulate yourself from this problem to begin with.
3. You may lose some of your possessions. California does allow you to keep a certain amount of equity in your home, car and possessions. However, if you have more equity than you are allowed, the court-appointed trustee may seize and sell any non-exempt assets. Again, this is why consultation with an experienced bankruptcy lawyer is critical. We will be able to evaluate with you whether certain possessions may be at risk before you file. If they are and that's a chance you're not willing to take, we can help you explore a Chapter 13 reorganization, which would, for the most part, allow you to hang on to your possessions. Alternatively, we can help you negotiate a debt settlement agreement with those creditors that pose the biggest threat to your financial health.
What you don't want to do is try to handle this on your own. If you aren't informed on the law, you can end up making mistakes that might not only cost you the opportunity to wipe the slate clean, it could lead to even bigger financial woes.
You can trust us to address all of your concerns and help you make the right decision for you.
Orange County Bankruptcy Attorney Vincent Howard at HOWARD LAW can help. You can reach us toll-free at 1-800-872-5925 or send us a message online.
What are the consequences of filing for bankruptcy? Sept. 12, 2012, By Marc Mewshaw, CNN Money
More Blog Entries:
Los Angeles Bankruptcy: Can You Inherit Debt? Aug. 30, 2012, Orange County Bankruptcy Lawyer Blog