Truths and Myths about Orange County Bankruptcy

One of the benefits to having reputable legal representation in the form of an experienced Orange County Bankruptcy Lawyer is that you will be fully informed with regards to the truth about bankruptcy. The negative connotations and misconceptions surrounding bankruptcy can lead some individuals to believe that bankruptcy isn’t the right choice, when in fact, it provides substantial financial relief to many individuals. There are many myths surrounding bankruptcy, and chances are good that you have heard at least a few of these yourself. However, understanding the truth regarding bankruptcy can help you to make an informed choice regarding your financial future and your peace of mind.

Myth: If I file for bankruptcy, my credit will be ruined for at least 10 years.

Fact: Filing for bankruptcy does not ruin your credit. The financial circumstances that cause you to file for bankruptcy are likely to have already caused considerable damage to your credit. After your debts are discharged, you can rebuild your credit, even with a bankruptcy discharge on your credit report. The bankruptcy will matter less as time goes by – what will matter is how you repay your debts after the bankruptcy discharge. As long as you are financially responsible, it shouldn’t take 10 years to improve your credit.

Myth: Discharged debts in a bankruptcy are subject to forgiveness tax.

Fact: Debts that are discharged in a bankruptcy are not subject to forgiveness tax. Once your debts are discharged, you will no longer be liable for payment of that debt, nor will you be liable for a forgiveness tax. A forgiveness tax may apply to you if you sell your home via a short sale or return it to the bank in a deed in lieu agreement – in this instance, the difference between what you owe and the amount the home is sold for may be subject to taxes by the IRS.

Myth: Filing for bankruptcy means that I will be in danger of losing my job.

Fact: It is illegal for employers to fire you for filing for bankruptcy. However, filing for bankruptcy will not prevent you from losing your job due to other reasons, such as layoffs or poor performance. However, if you lose your job shortly after filing for bankruptcy, depending upon the circumstances, you may be entitled to damages. If you have an experienced Orange County Bankruptcy Law Firm representing your case, you will be able to seek damages in court if your case qualifies.

Myth: I can go to jail if I don’t pay off my debts.

Fact: Unless your debts are the result of criminal activities, such as tax evasion, you cannot go to jail for not paying your debts. Consumer debt, such as credit card bills, can be troublesome, but it cannot land you in jail in most cases.

Don’t let misconceptions about bankruptcy prevent you from seeking the financial relief that filing for bankruptcy can provide. Contact our team of experienced, reliable Orange County Bankruptcy Attorneys today and get a free case evaluation. We can help you cut through the myths and understand the truth about what bankruptcy is, how it can benefit you, and what you need to do in order to take advantage of bankruptcy protection in Orange County.