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West Palm Beach Bankruptcy & Business Attorneys > > Bankruptcy Attorneys > Fighting the Misconception that Bankruptcy Is Only For Broke People

Fighting the Misconception that Bankruptcy Is Only For Broke People

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One of the biggest misconceptions associated with filing for bankruptcy is that a person must be completely broke with absolutely no money left in order to file for bankruptcy under the law. Along with this is another myth, that the court will take everything you own if you file for bankruptcy and leave you with nothing and render you homeless. These misconceptions could not be further from the truth. While the stigma and misperceptions surrounding bankruptcy are fading, it is important to address these inaccurate beliefs head-on to help those who could legitimately benefit from a financial fresh start offered by the federal government through the bankruptcy process.

Asset Protection

In many cases, people who consider filing for bankruptcy do not have just one debt but rather multiple debts that they are unable to repay. If you have a home or car and are in danger of losing them to foreclosure or repossession, filing for bankruptcy gives a person immediate relief from the possibility of losing their home or car. This legal relief is known as an “automatic stay” and this immediately halts any collections or legal actions against a debtor. All phone calls, harassing letters, wage garnishments, repossessions, foreclosures, evictions, utility shut-offs, and more are halted during the pendency of the bankruptcy. An automatic stay can provide a debtor some time to determine how best to move forward to resolve their debt and let them have some breathing room to make the best financial decisions.

Exemptions in the State of Florida

The state of Florida allows certain property to be exempt from both Chapter 7 and Chapter 13 bankruptcies if certain conditions are met. For example, Florida has a very generous homestead exemption which allows you to keep your home if you have any equity in your home in a Chapter 7 bankruptcy, and in some cases in a Chapter 13 bankruptcy. There are certain requirements such as you must have owned the property for a minimum of 1,215 days as well as other conditions. However, this should dispel the myth that bankruptcy results in the elimination of all assets and property of a debtor and leaves them homeless.

Chapter 7 vs. Chapter 13

While Chapter 7 bankruptcy will allow you to eliminate many of your consumer debts, you will also need to use many of your assets to pay the remaining debt. However, in Chapter 13 bankruptcy, a debtor does not eliminate any of their debt in some cases, but simply uses the tools of bankruptcy to allow them some fiscal breathing room, to create a “reorganization” plan that allows them to pay their creditors back on a 3-5 year schedule.

Contact an Experienced Bankruptcy Attorney

We can help you file for either Chapter 7 or Chapter 13 bankruptcy and get you a financial fresh start. The misconceptions and myths surrounding bankruptcy still persist, so to get a true understanding of how bankruptcy could help you, contact the West Palm Beach bankruptcy attorneys at Kelley, Fulton & Kaplan at 561-264-6850 for a free consultation.

Resource:

uscourts.gov/services-forms/bankruptcy/bankruptcy-basics/chapter-7-bankruptcy-basics

https://www.kelleylawoffice.com/student-loans-and-declaring-bankruptcy/

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