(Part 2)
In an earlier article, I discussed common misconceptions a lot of people have regarding bankruptcy. Based on my observations, these misconceptions still persists which hinders people who could be helped by bankruptcy to file the same. I have also encountered additional misconceptions about bankruptcy which prompted me to write a part 2 on this topic. I think it is important for people to be educated about these misconceptions because some people have unnecessary and unduly delayed filing bankruptcy when they could have done earlier or worse, did not file at all when they could have availed of reliefs under the law.
Most common misbeliefs about bankruptcy are as follows:
I have to be flat broke to file bankruptcy. Wrong. There is no requirement under the bankruptcy laws that one has to be flat broke to qualify for bankruptcy filing. You just have to prove that you are unable to pay your debts when they come due, except for certain exemptions.
In fact, the law provides a list of exempt properties which the trustee cannot take away or confiscate when you file bankruptcy. The goal of bankruptcy is to give the debtor a fresh start by allowing him to keep these exempt properties even after filing. The last thing the law wants you to become is a public charge.
I will lose my house if a file bankruptcy. If you are current in your mortgage payments (or can get current in your payments) and can continue paying it and your home equity is covered by the applicable homestead exemption, there is a good chance you can keep your residence even if you file Chapter 7 bankruptcy. The automatic homestead exemption for CA is $75,000. For families, the homestead exemption is $100,000.00 provided there is no family member with a homestead. It is $150,000 for a person 65 years or older or a disabled person. If your residential equity is above the CA homestead equity, you can consider filing Chapter 13.
I am going to lose my job if I file bankruptcy. Wrong. The law prohibits employers from firing employees because they have filed bankruptcy. If this happens, the employee can sue the employer.
I filed bankruptcy before. I cannot file bankruptcy anymore. Wrong. If you filed Chapter 7 bankruptcy before, you can file another Chapter 7 after 8 years from the date of the original filing. If you want to file Chapter 13, you can file after 4 years.
On the other hand, if you originally filed Chapter 13 bankruptcy before, you can file Chapter 7 after 6 years or another Chapter 13 after 2 years.
If you are contemplating of filing bankruptcy or other alternatives, it is advisable to seek the counsel of a bankruptcy lawyer to guide you on the intricacies of filing for such a petition.
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Evangeline is a California registered tax preparer, a legal document assistant for the general public, and a freelance paralegal offering assistance to various attorneys. She can be reached at her office at 2451 Colorado Blvd. #2, Eagle Rock, CA 90041 or at her marketing location inside the Eagle Rock Plaza. Her phone number is (323) 550-1869 or you can check her website at: www.evangelinegiron.net. She is a member of the court-endorsed California Association of Legal Document Assistant (CALDA) and an Associate Member (Non-attorney) of the LA County Bar Association (LACBA).
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Evangeline is not an attorney nor does she provide legal advice. She prepares legal documents at the specific direction of the client. She is a bonded and registered Legal Document Assistant (LDA#397, registration and bond filed in Los Angeles County, expires 3/23/2013.)
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