Garvey Tirelli & Cushner

5 Myths About Bankruptcy

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Here are the all time TOP 5 MYTHS about Bankruptcy - Exposed and set straight!

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MYTH #1:  "You must be dead broke before you can file for bankruptcy protection."
Reality:  This is completely FALSE!!!! In fact, it is better to consult with a bankruptcy attorney to learn how to protect your income and your assets before you are completely penniless.
MYTH #2: "Bankruptcy ruins your credit."
Reality:  If you are looking at bankrupty, chances are your credit has already taken a beating.  While Bankruptcy stays on your credit history for 7-10 years, guess what...SO DOES MOST EVERYTHING ELSE!   The good news is, Bankruptcy will eliminate your debt and once discharged, your credit score should increase between 150-200points.  Think of it this way, if you now earn $40,000.00 per year and have accumulated unsecured debts (ie credit cards) in the amount of $60,000.00 your debt to income ratio ("DTI") is hurting your credit score. Once you file for bankruptcy and have the debts discharged, your income will remain the same, but you now have $0.00 debt.  Essentially, you have flip-flopped the DTI.  Furthermore, you are actually a better credit risk after you file and have no debts than you are before you file.
MYTH #3: "If you file for bankruptcy you will lose your home."
Reality:  Not necessarily and in most cases, not at all.  The goal of bankruptcy is to protect you and your assets, not to punish you and toss you into the streets.  If you are behind in mortgage payments and need time to catch up, bankruptcy offers you the chance to reorganize your debts and catch up on the arrears (ie, the amount you are behind in payments) over a period of 3-5 years. Try asking your lender if they will take your arrears over a 3-5 year period and they will fall over laughing!  Once in bankruptcy, the lenders have no choice but to cooperate so long as you meet the qualifications and maintain the planned payment arrangement.
MYTH #4:  "You should max-out all of your credit cards before you file for bankruptcy."  
Reality:  If you purposely maxed out your credit cards intending to declare bankruptcy, you might have committed fraud.  Consult a bankruptcy attorney as soon as your debt is becoming out of control, typically, we will tell you that you need to stop using your credit cards and if you decide to declare bankruptcy, you also should stop paying your credit cards.  
MYTH #5:  "You should deplete your retirement funds (ie the 401K or IRA) before declaring bankruptcy."
Reality: ABSOLUTELY NOT!!!! Your retirements funds are protected from the grips of your creditors - do not take any money from yor retiremement account to pay creditors!  These funds are considered untouchable and should be kept for their intended purpose - YOUR RETIREMENT - not handed over to your creditors!
Call us today for a FREE bankruptcy consultation!   

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Garvey Tirelli & Cushner Ltd.
50 Main Street Suite 390
Wite Plains, NY 10606


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