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You are not alone in the bankruptcy process. Let us serve as your guide, helping you secure maximum debt relief through whichever type of bankruptcy is best suited to your specific case. Contact us today to get started.

When it comes to bankruptcy, misinformation can cause unnecessary fear and hesitation. Many myths surround the process, often discouraging people from seeking the financial relief they need. Here, we’ll address some of the most common myths and set the record straight so you can make an informed decision.

Myth: Bankruptcy Is No Longer an Option

Changes to bankruptcy laws in 2005 have led some to believe that bankruptcy is no longer viable.

The Truth About Bankruptcy Today

  • Bankruptcy Is Still Accessible: The Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) did make the process more structured, but bankruptcy remains available to individuals and businesses.
  • Qualified Guidance Makes It Easier: While the process can be more complex, working with an experienced bankruptcy attorney ensures that the process is as smooth and cost-effective as possible.

Myth: Medical Bills Cannot Be Discharged

One of the most persistent myths is that medical bills cannot be included in a bankruptcy.

What You Need to Know

  • Medical Bills Are Unsecured Debt: Like credit card debt and personal loans, medical bills are considered unsecured debt and can be discharged in bankruptcy.
  • Chapter 7 and Chapter 13 Relief: Both types of bankruptcy offer ways to eliminate or restructure medical debt, providing significant relief for those burdened by healthcare costs.

Myth: Chapter 13 Requires Full Repayment

Many believe that filing for Chapter 13 bankruptcy means repaying all debts in full.

Understanding Chapter 13 Plans

  • Flexible Payment Plans: Chapter 13 repayment plans are based on your disposable income, non-exempt asset value, and priority debts. In some cases, general unsecured creditors receive little to no repayment.
  • Customized to Your Needs: Plans range from partial to full repayment, depending on your financial circumstances.

Myth: Bankruptcy Destroys Your Credit for a Decade

It’s often said that bankruptcy will leave you with terrible credit for 10 years, but this is misleading.

How Bankruptcy Actually Affects Credit

  • Credit Recovery Is Possible: While a bankruptcy filing remains on your credit report for up to 10 years, it doesn’t mean you can’t rebuild your credit. Many people begin receiving credit offers shortly after their discharge.
  • Immediate Steps to Rebuild: Secured credit cards and responsible borrowing can help you improve your credit score over time, often within just a few years.

Myth: Filing for Bankruptcy Means Losing Everything

A common fear is that bankruptcy will leave you with no assets.

Asset Protection in Bankruptcy

  • Exemptions Keep Assets Safe: Most bankruptcy filers use exemptions to protect assets such as homes, vehicles, and personal belongings.
  • No-Asset Cases: The majority of bankruptcy cases are “no-asset,” meaning the debtor retains everything they own.

For example, retirement accounts like pensions are protected from creditors and bankruptcy trustees, ensuring long-term financial security.

Why Debunking These Myths Matters

Believing these myths can prevent you from pursuing the financial relief that bankruptcy offers. In reality, bankruptcy provides a legal path to eliminate or restructure debt, protect your assets, and rebuild your financial future.

If you’re overwhelmed by debt, contact The Law Offices of Paul Y. Lee at 951-755-1000 for a free bankruptcy consultation. We’ll guide you through the process, answer your questions, and help you determine the best path forward. Let us help you take control of your financial situation today.