Bankruptcy: Myths and Misconceptions 

Let’s cut to the chase, filing a bankruptcy case is not without consequences. If you don’t know anyone who has filed, it can be scary and pose a lot of unanswered questions. What will happen to my credit? Will I ever be able to buy a house or a car? Who decides what I can keep and what bills I can discharge? The answers to the most common myths and misconceptions are here. 

Bankruptcy means I won’t ever be able to have credit again. FALSE.  

Access to credit is important in our world. You can’t rent a car or book a hotel room without one. Most of our clients are concerned that they won’t ever be able to have a credit card again. While, it’s important to use credit wisely and learn to only use credit when you know you can afford to pay it back, filing for bankruptcy does not mean you’ll never see a credit card again. On the contrary, most people find that they are immediately offered credit after their bankruptcy case finishes. Secured credit cards are also available and can help you to rebuild your credit score after filing or even during your case.  

My credit score will be ruined for 10 years. FALSE.  

This is one of the biggest misconceptions out there and it’s just not true. Many people think that bankruptcy is a scarlet letter, that they will have horrible credit for years on end. The truth is that bankruptcy often IMPROVES your credit score and many people can see an increase of 100 points or more in their credit score in a year or less. It’s not uncommon for people to have credit scores over 700 points a year or two after bankruptcy and at Gale Angelo Johnson P.C. we offer special programs to our clients to help them rebuild even faster.  

I’ll never be able to buy a house. FALSE.  

You can buy a home after bankruptcy. You can even buy a home when you are in the middle of bankruptcy. There is a lot that goes into buying a house and it would be fair to say that you won’t qualify for the best home loan the day after your bankruptcy is filed, but many top-quality, best-interest rate home loans are available in the current market only 12 months after bankruptcy. If you are deep in debt and years away from paying off credit cards, bankruptcy may actually be the first step towards homeownership. 

I won’t be able to keep my car or my house. FALSE.  

Bankruptcy rules are complicated, but the laws that allow consumers to protect their belongings and assets can protect a house or car. These rules vary state by state and it’s important to consult with an attorney to discuss your unique situation. This also depends on the chapter of bankruptcy that you file. It is very rare that a bankruptcy client must involuntarily give up a house, car, or other personal belonging and in the vast majority of cases, we can fully protect your home and your vehicle in your case.  

I can’t afford to file for bankruptcy. FALSE.    

If you owe $10,000 on your credit cards with an average interest rate and pay $225 per month, it will take you over 10 years to pay your debt off and you will end up paying over $20,000 to pay off your debt. That’s unaffordable, it’s impractical, and it’s what the credit card companies want you to do. Compared with paying debt, the cost of bankruptcy is nominal and can provide you with much-needed relief much faster than other alternatives. Gale Angelo Johnson P.C. offers workable payment plans and fair prices.

Call us at (916) 290-7778 or complete the form to the right of this page to schedule a FREE consultation with an attorney today to discuss your personalized needs.


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