Sacramento Bankruptcy: Top Bankruptcy Myths 7-10

Sacramento residents share many common misconceptions about bankruptcy.  Here, we dispel some of those myths:

7)  Deadbeats are the only ones who file for bankruptcy.

Bankruptcy is most often the result of events beyond your control.  Divorce, loss of a job, and serious medical emergencies are the most common causes of a bankruptcy.  Most have struggled and tried to pay their bills for months and keep falling further and further behind despite their hard work.

8)  I shouldn’t include all my creditors because I am determined to pay some of them back and if I go through bankruptcy then I cannot repay them.

This is an honorable sentiment, but it is inaccurate.  Even though a bankruptcy filing takes away the obligation to repay, it does not take away the opportunity.  If your conscience tells you to repay your debts, no law will prevent you from making that choice.  On the other hand, bankruptcy is an all-or-nothing deal, and you must include all of your creditors in the petition.

9) Filing for bankruptcy will improve my credit rating because all my debts will be gone.

This one sounds like an add for an unscrupulous lawyer chasing clients.  Of course, bankruptcy is the worst type of negative mark you can get on your credit report.  Bankruptcy can stay on your record for 10 years; however, there are steps you can take to begin rebuilding your credit.

10)  You can only file for bankruptcy once.

Although you can file for bankruptcy more than one time, new bankruptcy reforms do lengthen the required wait time between filings.  For Chapter 7, the limit is one filing every eight years.  For Chapter 13, the minimum wait is two years.  Between a Chapter 13 and Chapter 7 filing, the law imposes a four year wait period.
Just because you can file more than once doesn’t mean you should.  “Multiple bankruptcies are really bad,”  Rosenberg says.  “Many people get into the habit of once they’ve done it, it becomes a way of life.  This is not good for your karma,” Rosenberg says.  Ditto that for your credit rating.

The Sacramento office of Sagaria Law has experience advocating for clients in all manner of bankruptcies; our attorneys look forward to meeting you for consultation to discuss your issues further.

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