Dispelling Bankruptcy Myths
The financial curveballs of life can sideline you from paying bills and debts or meeting your various financial needs. When experiencing financial hardship, filing for bankruptcy provides a promising solution to help you achieve relief or a fresh start.
However, there are a lot of misleading assumptions out there discouraging many individuals from using bankruptcy to achieve financial relief. Therefore, getting reliable advocacy from a seasoned Louisiana bankruptcy attorney is crucial to understand the procedures involved and avoid costly mistakes when you file.
At Hoke Law Firm, we're dedicated to offering comprehensive and knowledgeable guidance to clients in bankruptcy-related matters. Our trusted attorney can determine your eligibility for bankruptcy, enlighten you about the filing process, and help clarify some of the myths and misunderstandings. We're proud to serve clients across Baton Rouge, New Orleans, and Lafayette, Louisiana.
Common Bankruptcy Myths and Misunderstandings
There are numerous preconceived opinions and false information out there about how bankruptcy works. For this reason, Louisiana bankruptcy lawyers must properly enlighten their clients about the bankruptcy process, how to prepare for bankruptcy, and what to expect while filing and post-bankruptcy. Here are some common myths and misunderstandings about bankruptcy in Louisiana and why they're false:
Misconception #1: Bankruptcy permanently ruins your credit.
Filing for bankruptcy in Louisiana can affect your credit score. It may even plummet your credit rating by between 160 and 240 points. Thus, turning a good credit rating into bad or poor. In addition, the bankruptcy will stay on your credit report for between 7 and 10 years. Fortunately, you can start repairing your credit score after filing or receiving your discharge. Monitoring your credit rating and emulating good financial practices can make you become credit-worthy again.
Misconception #2: Discharges all debt.
This is not true. Generally, filing for bankruptcy won't eliminate all your outstanding debts. Depending on the type of bankruptcy you file, only qualifying debts will be discharged. You're still required to settle all debts that are not discharged in bankruptcy.
Misconception #3: If you are married, you both have to file.
This is false. In Louisiana, legally married couples are allowed to file their bankruptcy petition separately or jointly with their partner. However, the decision to file jointly will depend on the surrounding circumstances of your unique situation.
If you have joint marital debts, want to reduce the expenses, paperwork, and time, and benefit from the available double property exemptions in Louisiana bankruptcy, you can file jointly with your spouse. Regardless, you should consult with your bankruptcy attorney to know the benefits and downsides of filing for bankruptcy individually or jointly.
Misconception #4: You lose all your possessions.
This is another common misconception. Filing for bankruptcy won't make you lose all your assets or leave you destitute. Depending on the chapter of bankruptcy you're filing for, you will be allowed to keep some or all your major assets, including your primary home, motor vehicle, clothing, and furniture pieces. In some cases, you can still retain all your assets and property.
Misconception #5: Bankruptcy won't stop creditor harassment.
This is not true. When you file your bankruptcy petition, an "automatic stay" order will be activated. This is a court injunction that prohibits creditors and debt collectors from harassing or contacting you, foreclosing your property, garnishing your wages, or taking any collection or legal action against you. If the creditor violates the automatic stay order and keeps harassing or contacting you, you should inform your lawyer as soon as possible.
Misconception #6: You can only file for bankruptcy once.
In Louisiana, consumers are allowed to file for bankruptcy more than once. However, there is a limit on the number of discharges you can get from the court. If you file a second bankruptcy too early, the court may not issue you a bankruptcy discharge.
Misconception #7: Debt consolidation is a better option.
Debt consolidation is a debt relief option that allows you to combine different debts – such as bills, liabilities, credit card debts, and loan payments – into one (single) larger debt. Also, you must take out another personal loan or credit card to settle your consolidated debts.
However, there are some benefits to seeking debt consolidation. Nonetheless, debt consolidation is not always the best option to achieve relief. In fact, debt consolidation hardly solves your financial issues. In the long run, it might cost you more money and complicate your financial situation.
Make Informed Decisions Every Step of the Way
According to the American Bankruptcy Institute, there were 7,321 total business and non-business bankruptcy filings in Louisiana in 2022. These consumers didn't file their petition alone, and neither should you.
At Hoke Law Firm, we're poised and ready to advise and guide clients through the complexities of bankruptcy. Whether you're filing for Chapter 7, Chapter 13, or any other type of bankruptcy, our skilled lawyer can walk you through the process and help you navigate key decisions.
Contact us at Hoke Law Firm today to schedule a simple case evaluation with a seasoned bankruptcy lawyer. Our dedicated attorney can offer you the personalized legal counsel and detailed advocacy you need in your bankruptcy case. We're proud to serve clients across Baton Rouge, New Orleans, and Lafayette, Louisiana.