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Bankruptcy Myths & Facts


Courtesy of New Jersey LawSite member, Michael Detzky, Esq.
 

 

Myth:

You will never be able to obtain a Mortgage to purchase a home or get another car loan or lease if you file bankruptcy.

Fact:

Not true. Most mortgage lenders will consider you for financing within 2 years after your bankruptcy case is closed, so long as you are otherwise qualified. Most auto lenders will grant you credit, but most likely at a higher interest rate.

There is absolutely nothing in the bankruptcy laws which prohibit you from obtaining new credit after your case is concluded, either secured or unsecured.

Myth:

If you file bankruptcy you will lose all of the money you have in your 401(K), IRA, or employer provided pension plan.

Fact:

Absolutely false. Both federal and state law protect 100% of all the funds in any pension plan, which is qualified and exempt from taxation under the Internal Revenue Code. It does not matter how much money you may have in your pension plan and whether or not you are vested.

Myth:

A credit counselor or debt consolidation agency can reduce or eliminate your debts without the necessity of a bankruptcy.

Fact:

Not always. Most credit counselors are really working for your creditors, not you. While they may be able to reduce your monthly payments or principal balance, they never can completely eliminate the debt and your creditors are under no obligation to work with them. Only bankruptcy can completely eliminate your unsecured debts and it does not require the consent or cooperation of creditors.

Myth:

Why should I file for bankruptcy? I just lost my job, my house is in foreclosure and all I own are the clothes on my back, my car and a few dollars in the bank. After all, you cannot get blood from a stone.

Fact:

If you do nothing, it will not get any better. You may not have a job now, but once you do, your creditors will be able to garnish your salary and seize and sell your car and levy on your bank accounts. By filing bankruptcy you can stop all this and may even be able to stop your mortgage arrears over a period as long as 5 years. It doesn't cost anything to hear all your options from a bankruptcy lawyer with over 30 years of experience. Why not call today?

Myth:

President Obama's federal Bail Out proposals will reduce your debts and help you avoid foreclosure without having to file bankruptcy.

Fact:

Nothing in the President's Bail Out plan can help you pay your credit card debt and none of his proposals to assist homeowners in foreclosure has yet been past by Congress. Only the existing bankruptcy laws can help people with excessive credit card debt or homeowners in distress.




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Finding the appropriate New Jersey lawyers for your particular legal need is the purpose of this site. You may find them by searching by County, or by practice area in New Jersey law, or use our onsite search engine. This page lets you view FAQs on various New Jersey law written by the members of New Jersey LawSite.