Myths OF Bankruptcy: If I File Bankruptcy, I’ll Lose Everything

Myths OF Bankruptcy: If I File Bankruptcy, I’ll Lose Everything

First and foremost, no person who has filed a bankruptcy case has ever been forced to go out in public wearing nothing but a barrel or flour sack. And yet, this image, and many like it, sadly exist in the minds of many members of the American public who falsely believe bankruptcy is synonymous with losing everything. A notion cultivated by America’s stigmatization that filing bankruptcy is an unacceptable way of dealing with debt.

Banks, credit card companies and other lenders cultivate this stigma because they want to discourage borrowers from filing bankruptcy. The best ways to do this is to make prospective debtors think that filing bankruptcy is not only a bad act but has solely negative consequences such as the loss of all possessions.

But the opposite is actually true. The primary purpose of a Chapter 7 bankruptcy filing is to provide debtors with a fresh start NOT for them to trade or exchange all their worldly belongings for the release of their obligation to repay their debts. To truly achieve a fresh start, it is necessary to allow debtors to retain or “exempt” certain possessions, including a motor vehicle, clothing, and furniture that are vital to everyday living.

Thus, filing for bankruptcy does not trigger a visit from several men and a moving van.

Instead, all fifty states provide property exemptions which allow debtors to keep certain possessions from the reach of creditors. Another example of how debtors may keep necessary or essential property in a bankruptcy case is the homestead exemption.

Lost in all these unfair and inaccurate perceptions are the benefits of filing bankruptcy. In fact, filing a Chapter 7 or Chapter 13 bankruptcy case allows debtors to retain most, if not all, of their real and personal property.

Determining what bankruptcy exemptions apply to a prospective bankruptcy debtor’s case may require a complex legal analysis. Theron Morrison and his team of attorneys at MLG may help anyone with this complicated but necessary evaluation of their assets. Talk to the Morrison Law Group about how the Utah exemptions may affect your potential Chapter 7 or Chapter 13 bankruptcy case. Call 801.456.9933 today to schedule a FREE consultation. We are Utah’s only statewide bankruptcy law firm and have locations in Ogden, Logan, Sandy, and St. George to serve the residents of the counties of Weber, Cache, Salt Lake, Utah, Morgan, Davis, Washington, and surrounding areas.

Myths OF Bankruptcy: If I File Bankruptcy, I’ll Lose Everything

 

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