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Debunking Popular Bankruptcy Myths

 ATTY. PAUL M. ALLEN

For many years, bankruptcy has really gotten a bad rap. It has been perceived as something shameful. Often people have had the opinion that if someone has filed bankruptcy, they must be irresponsible and just don’t want to pay their bills.

Fortunately, the perception of bankruptcy is changing. With so many Americans struggling in this economy, more and more people have had little choice but to consider bankruptcy as an option. When people speak to a bankruptcy lawyer and do a little research, they find that bankruptcy is simply a legal tool to help people get a fresh start. There is no judgment as to what brought you to this financial challenge. Opting to file bankruptcy is not irresponsible, it is the opposite. You are taking measured steps to correct your financial problems and move on with your life.

Because of the misperceptions that people have held regarding bankruptcy, many myths have arisen that simply are not true. Based on this misinformation, people do not use the help that is available to them.

I Will Lose Everything

People often do not file bankruptcy because they fear they will lose everything. Coping with severe financial stress appears the lesser of two evils. In bankruptcy, there are exemptions that protect various assets, such as your car and house, household goods and retirement plans. These exemptions vary from state to state, however in most cases people are able to simply keep paying on those items and are able to keep them.

Filing for Bankruptcy is too Hard

Filing for bankruptcy does take some preparation. While it is technically possible to file for bankruptcy on your own it is not recommend. Once you meet with your bankruptcy lawyer and hash out all the details, you will find it a fairly straightforward process. Your bankruptcy lawyer will be handling all the filings and follow up. You are usually only required to make one court appearance (a creditor’s meeting).

I will Ruin my Credit

It is true that bankruptcy is reflected on your credit report. However if you have been struggling with financial problems, chances are your credit is probably already damaged. Most bankruptcy filers are surprised to find that it is not long before they receive credit card offers. If want to buy a house or a car, you may have a more difficult time due to the tightening of the credit markets. You may also have to deal with a higher interest rate on a large purchase.

I Should Avoid Bankruptcy at All Costs, and Liquidate Assets to Pay off Bills

If you have a 401K or other retirement account, you should not cash it in to avoid bankruptcy. Retirement accounts are protected in bankruptcy. Also, if you draw on a retirement fund, you will be subject to a very high rate of taxation, which will only make matters worse.

My Immigration Status will be Affected

This is completely false. It is important to remember that filing for bankruptcy is not a crime. Your green card or application for citizenship will not be affected.

Even if I file, Creditors can still Harass Me Unmercifully

If you have been suffering with financial difficulty, you are well aware how unpleasant creditors can become if you fail to make a payment on time. A great advantage in filing bankruptcy is the automatic stay. This means that just as soon as you file, your creditors and prohibited from contacting you or collecting their debt in any way.

Bankruptcy is a viable solution for those experience unmanageable financial turmoil. Speak with an experienced bankruptcy lawyer from the Law Offices of Paul M. Allen for more information. Our office has helped hundreds ands of clients stop repossessions, wage garnishments and more. Get back on the road to financial stability and call our office today. We will provide your will legal guidance as well as a free consultation. We have three offices to serve you, Glendale (818) 552-4500, Cerritos (562) 865-4480 and West Covina (626) 262-4446.

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Atty. Paul M. Allen is a member of the highly respected National Association of Consumer Bankruptcy Attorneys and an active member of the State Bar of California. His offices are located at 520 E. Wilson Ave., Suite 110, Glendale, CA 91206, and 17215 Studebaker Rd., Suite 380, Cerritos, CA 90703, with telephone numbers (818) 552-4500; (562) 865-4480; and (866) 903-4522. He also has offices at 2640 E. Garvey Ave., Suite 104, West Covina 91791, with tel. no. (626) 262-4446. 

(This article is for information purposes only, and does not necessary reflect the company’s opinions and views on general issues. We make no warranty, prediction nor representation, nor do we assume any legal liability for the completeness of any information and its effect on any case. Each case is different and results depend on the facts of each case. Consult with and retain counsel of your own choice if you need legal advice.) ■

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