Bankruptcy can send chills down anyone’s spine, that is, if you don’t properly understand what it actually means. In the event of a person or business being unable to pay off their debt, a person will often resort to bankruptcy as a means of salvation from their financial troubles. Unfortunately, there are also many
myths floating around about bankruptcy that will often keep people in need from actually going through with it. Bankruptcy may just be the best option for you, consider some of these myths to see if they have been keeping you from taking that next step towards riding yourself of debt.

One of the main concerns people have when weighing the option to file for bankruptcy is that once you file, your credit will be ruined forever. The important thing to understand if you are in this situation is that your credit is already in ruins! If you are in deep amounts of debt it is likely that you have already missed many payments on your credit cards, each time you miss a payment you credit score in negatively affected. A way to view your bad credit is that there is a lot to pay off, but with discipline it is possible. The other option is realizing it would be impossible to get out of this large debt, which means filing for bankruptcy is your best option. Individuals that think bankruptcy will disappear if they leave it alone or ignore it have it all wrong, the longer you wait to act the worse your credit score will be.

Another myth about bankruptcy is that only irresponsible people file for bankruptcy, and that is not the case! Experienced, hardworking individuals who held an honest job for thirty years can get laid off and be left to file for bankruptcy. By doing so doesn’t mean “loser” is stamped on your forehead, it just means that you have acknowledged you financial struggles and have chosen to take action, it is a step of humility, and a wise one at that. Unfortunately many struggling families assume that if they file for bankruptcy it will lead to a divorce because of the stress it will cause, this too is a myth.

While each family situation is unique, often times it is financial issues that lead to divorces; such as not paying your bills and acquiring debt. By filing for bankruptcy it is taking a proactive step to move forward. Bankruptcy is a step that is taken towards getting out of debt, and though it isn’t an overnight magic dust, it is effective; and may just save a marriage rather than break one. Commit as a family to work together in financial stress, and consider that while there are many horror stories about bankruptcy, it is important to seek truth and facts. Contact Dodge & Vega today for legal advice regarding your concerns about bankruptcy, it is the next step towards debt freedom!

In 2005 the bankruptcy law was revamped to its current form. Periodically, the rules that govern bankruptcy are reviewed and tweaked. On December 1, 2011, some of those tweaks took effect. In chapter 7 and chapter 13 cases, creditors will feel the greatest effect with the new changes.

Creditors filing proofs of claim in bankruptcy cases will not be required to file documentation to support the amounts they are claiming, as opposed to a simple summary. Creditors must include all charges that are included in the claim. Creditors who hold a security interest (like a mortgage) must disclose the amount of any default at the time of filing. Mortgage creditors must also attach documentation proving the security interest and an escrow statement if an escrow account exists on the property.

Mortgage creditors will also be required to file with the Court any changes in mortgage payments, regardless of the reason. They must also serve on a debtor an itemized statement of any post-petition charges, including late fees, NSF charges or attorney fees. Along with the new requirements for mortgage creditors, the trustee in a chapter 13 case must file a notice of the final cure payment being made to a mortgage lender. The mortgage lender then has 21 days to dispute that notice.

If you have any questions regarding these changes and how it may affect your bankruptcy case, please don’t hesitate to contact us. We always look forward to helping in any way we can.