Bankruptcy Notions That You May Believe

Losing your job, accumulating large debts and other financial problems can lead to serious hardships for you and your family. Escaping this problem will often require a person to file for bankruptcy, but it can be easy to allow misinformation to discourage people from seeking this type of legal protection.

Myth: You Can Accumulate Debt Just Before Filing For Bankruptcy To Have It Discharged Without Paying

When some individuals are considering filing for bankruptcy protection, they may assume that they will be able to accumulate a lot of debt on purchases just before filing for this protection. This may seem like it will be an effective way of getting out of actually paying for these expenses, but the courts are well-aware that some individuals will attempt to do this. In order to prevent abuses, the courts will closely scrutinize these debts to determine whether they were valid. For example, debt that was accumulated to see a doctor or to repair a work vehicle will likely be allowed to be claimed on the filing. However, seemingly frivolous expenses, such as shopping and vacationing, will be far more likely to be rejected from the bankruptcy claim.

Myth: A Bankruptcy Will Be Extremely Embarrassing And Contentious

Individuals that are experiencing financial difficulties will often feel embarrassed or otherwise ashamed of their situation. However, individuals should never feel ashamed to be giving themselves a fresh start. Luckily, the process of filing for bankruptcy is designed to be as private and respectful as possible for all parties involved. This is done through the use of mediated negotiations as well as orders requiring communications be sent through the bankruptcy applicant's attorney.

Myth: You Will Be Unable To Afford To Hire A Bankruptcy Attorney To Start This Process

It is an unfortunate reality that the court system can be rather expensive, and there are some individuals that may be concerned about paying for these proceedings. In particular, the fees that are needed to retain an attorney may be especially intimidating to individuals. However, bankruptcy attorneys will frequently make arrangements with their clients so that paying for their services will be as convenient as possible. Often, these arrangements will involve listing the attorney as a creditor to the bankruptcy applicant's assets or they will break their fee into installments. Also, to help protect those filing for bankruptcy protection, there are many states that have caps on the total compensation that these attorneys can be awarded.