Debunking Common Myths About Bankruptcy in New York: The Truth

Facing financial hardship can be overwhelming. Debunking common myths about bankruptcy in New York is crucial for informed decisions. It’s easy to feel lost and confused when dealing with debt, creditor harassment, and potential foreclosure. This article dispels common bankruptcy misconceptions in New York, empowering you to seek help and regain financial control.

Debunking these myths is not just about understanding the law; it’s about reclaiming your financial life. Making sound decisions when seeking bankruptcy can lead to a fresh start. For instance, did you know that a loan modification can help you avoid foreclosure? Let’s explore several myths related to New York bankruptcy so you can take appropriate action.

Debunking Common Myths About Bankruptcy in New York

Myth 1: Bankruptcy Means Losing Everything

Many believe filing bankruptcy means losing all possessions. This is false. New York Chapter 7 bankruptcy offers exemptions, protecting assets like your home, car, and belongings. These exemptions, though varying by state, are generous in New York.

Consult a bankruptcy attorney to understand what you can protect. Discussing specifics with a bankruptcy lawyer helps navigate exemptions. They can determine what you can keep during bankruptcy proceedings.

Myth 2: Bankruptcy Ruins Your Credit Forever

Filing bankruptcy impacts your credit score, but not permanently. Chapter 7 remains on your credit report for up to 10 years, Chapter 13 for 7. However, this isn’t irreparable damage.

Filing bankruptcy might even improve a low credit score. Eliminating most existing debt signals lenders of potential repayment. Filing for bankruptcy court protection allows you to rebuild credit with responsible credit card use and a good handle on paying utility bills.

Diligent post-bankruptcy financial management can help you rebuild your credit rating. Credit cards, loans, credit repair services, along with financial education can help your credit score and income.

Myth 3: Everyone Will Know About Your Bankruptcy

Bankruptcy filings are public record, but not widely publicized. Unless you’re a high-profile figure, few people will likely access these documents. So, most of the people who file for bankruptcy in New York State should not be too concerned with people knowing they filed. These cases are not broadcasted, and there are some privacy restrictions.

Myth 4: Bankruptcy Makes Getting Loans Impossible

Getting loans after bankruptcy is challenging but possible. However, it may be more difficult and terms might not be ideal initially. Car loans may require a downpayment but could get approved with the automatic stay provided by filing.

Seeking personal or mortgage loans after Chapter 13 or Chapter 7 usually requires a waiting period (typically one or four years respectively). Rebuilding good credit is key to regaining borrowing options after you filed. There are good people who file and regain their financial stability quickly after filing for Chapter 7.

Myth 5: Bankruptcy Discharges All Debts

Bankruptcy offers relief from most debts, but not all. Some debts like domestic support obligations, certain taxes, and student loans are usually non-dischargeable. Debts incurred through fraud or criminal acts also remain. Credit card debt can typically be discharged, offering relief to individuals overwhelmed with card debt.

Even so, many debts are discharged during bankruptcy and those laws provide that debt relief for things like medical debt, and even past income taxes. Filing Chapter 7 helps wipe out most debts and allows you to keep some assets through exemptions.

Myth 6: Only Irresponsible People File for Bankruptcy

Bankruptcy doesn’t equate to irresponsibility. People file for various reasons: job loss, divorce, medical emergencies, failed businesses, wage garnishments. Recessions and other unforeseen circumstances contribute. Bankruptcy also helps deal with overwhelming student loan debt. Credit ratings may decrease after filing but rebuilding is possible.

Bankruptcy is a resource for responsible people navigating tough situations, providing debt relief. It offers a structured path for managing overwhelming debt, protecting retirement pension and Social Security payments during times of crisis. This legal avenue offers the possibility for individuals to rebuild their lives and maintain some semblance of financial stability while dealing with bankruptcy and eligibility requirements. 

Myth 7: Filing Bankruptcy is Incredibly Complex

Navigating bankruptcy law is complicated. Experienced bankruptcy attorneys simplify the process. They offer legal advice and procedural guidance and also advise on loan modifications, providing assistance with preparing and filing documents.

Working with an attorney ensures compliance with New York’s bankruptcy laws and procedures. They offer time estimations for filing and legal guidance, which simplifies a complex legal process for you, the person filing bankruptcy.

Conclusion

Debunking common myths about bankruptcy in New York empowers those facing financial difficulty. Bankruptcy is a legal tool offering a path to regain financial stability and rebuild your life after setbacks. It is NOT a sign of personal failure. If you would like to learn more about filing bankruptcy and if this is the right path for you, schedule a consultation with William Waldner. You can have all your questions answered and learn more about what the process entails in one simple meeting!