5 things most people don't know about bankruptcy in Flint, MI
If you’re researching bankruptcy in Flint, MI, you’ll no doubt find an overwhelming amount of information on the subject — from the internet, friends, family, maybe even your financial advisor. Sadly, not all the information you find will be true, especially since bankruptcy is often perceived as a negative development.
To help clear up some of those common misconceptions, let’s walk you through five things you may not have known about bankruptcy.
1. Filing bankruptcy is a constitutional right
You have a legal right to wipe your debts and start afresh on your credit. To that end, Article 1, Section 8, Clause 4 of the United States Constitution empowers Congress to establish a uniform Rule of Naturalization, and uniform Laws on the subject of bankruptcies throughout the United States.
In 1978, the Bankruptcy Reform Act, commonly referred to as the Bankruptcy Code was passed by Congress. Among its many provisions, the Act prohibits discrimination against anyone who has exercised their right to file for bankruptcy.
2. You won't lose everything when you declare bankruptcy
It’s a common misconception that filing for bankruptcy automatically means giving up all your possessions. In reality, many Chapter 7 filings are actually no-asset cases, meaning you might be able to keep your property even after declaring insolvency.
There are two primary reasons for this. First, you get to set aside some basic assets under your exemptions list. These are possessions that are necessary for your daily living. The type of assets you can exempt varies from state to state, so be sure to work with a reliable bankruptcy lawyer throughout the process.
The second reason is that many of the other assets that aren’t covered under exemptions may not be of interest to creditors. If they’re not coming for those assets, then you get to keep them.
3. Not all of your debts will be eliminated
Considering all the processes you’ll have to go through when filing for bankruptcy, you’d think your entire debt profile would be wiped clean. That’s never the case. Both Chapters 7 and 13 have specific provisions for what debts may be relieved.
The general rule of thumb is that bankruptcy doesn't eliminate debts that you are personally responsible for — these include child support, alimony, most student loans, debts resulting from fraudulent practices, and most taxes. Additionally, some creditors can object to some of your debts that are being discharged under bankruptcy. If they win, you’re obligated to repay the owed amount(s) within a given period.
4. The highest number of bankruptcy cases recorded was in 2005
According to Debt.org, the year 2005 saw an all-time high of bankruptcy filings in the last 20 years with over two million cases. Basically, one out of every 55 households filed for bankruptcy that year. The second highest was in 2010 with over 1.5 million cases filed.
5. Sometimes declaring insolvency is the best option
Bankruptcy often gets a bad name but in reality, it can be the best, most practical solution for people who are drowning in debt. Uncertainties abound, especially in the wake of newer strains of the Coronavirus popping up every day. There’s no shortage of things that can impact one’s finances, and it’s always going to be difficult to find a way out.
If you find yourself short of options, don’t discount filing for bankruptcy as a solution. Forget about any preconceived notions you may have about bankruptcy. Instead, talk to a trusted bankruptcy attorney and let them point you in the right direction.
Thinking of filing for bankruptcy in Flint, MI?
The team at James L. Gutting, Attorney-at-Law can help. We can walk you through the entire process, as well as help you fully understand all your options before getting started. Book your appointment today by calling 989-743-1188 or 810-230-1517. You can also get in touch by sending us a message through our contact form.
