As an experienced Chicago bankruptcy lawyer, I know that many myths exist regarding bankruptcy. Here I attempt to dispel a few of the more common ones. If you are considering filing for bankruptcy, make sure you raise any worries or concerns you have about the process with your Chicago bankruptcy lawyer. You may find you had less to worry about than you thought.
Myth #1: Most individuals can no longer file for bankruptcy since the Bankruptcy Code was changed in 2006.
In 2006, Congress made changes to the Bankruptcy Code, affecting some individuals’ Chapter 7 eligibility. This was done in response to what was viewed as widespread abuse of the bankruptcy process. Now, to file for Chapter 7 bankruptcy, you must earn less than the median income for individuals of your state, or you must satisfy the means test. The means test measures the amount of disposable income you have remaining each month after paying all necessary expenses. Therefore, some potential bankruptcy petitioners may not be eligible for Chapter 7 bankruptcy depending on their disposable income. However, the recent Bankruptcy Code changes have had little effect on Chapter 13 eligibility.
Myth #2: If I file for bankruptcy my case will drag on for years.
Most Chapter 7 bankruptcies are completed within 3 to 4 months. However, if you file for Chapter 13 bankruptcy, you must complete a repayment plan before you will receive a bankruptcy discharge. A repayment plan can last three or five years depending on the amount of debt and the number of assets you would like to keep following the bankruptcy.
Myth #3: I can only file for bankruptcy once in a lifetime.
There are no limits regarding how many times you may file for bankruptcy in your lifetime. The Bankruptcy Code allows you to file for Chapter 7 bankruptcy every 8 years. In addition, if you previously filed for Chapter 7 bankruptcy and 8 years have not elapsed since your last bankruptcy filing, you can file for Chapter 13 bankruptcy. However, to receive a discharge of your debt, you must wait 4 years after filing for Chapter 7 bankruptcy to file for Chapter 13 bankruptcy.
Myth #4: Everyone will know about my bankruptcy.
A bankruptcy filing is public information. For example, after you complete your bankruptcy case and you receive a bankruptcy discharge, creditors will have access to your bankruptcy filing. However, it is unlikely that the general public will search the online database to find your bankruptcy filing.
Filing for bankruptcy is a big decision. Get help in deciding whether it is right for you. Contact Chicago bankruptcy attorney Lorraine Greenberg for a free initial consultation.