New York City Bankruptcy Rumors (Round I)

A short post today to warn many of you of listening to bankruptcy rumors and misconceptions from members of the community about bankruptcy laws. As I’ve stated in previous posts, in order to save some money, people have been attempting to file their Bankruptcy cases through community members as opposed to attorneys. Here is the problem with this (also questions posed from clients in my office):

  • Rumor #1 – I can’t file bankruptcy if I have any money in the bank. TOTALLY FALSE! The Median Test lays out exactly how much you can earn on an annual basis (and based on family size).
  • Rumor #2 – I can’t keep my car if I file for Bankruptcy. FALSE! This all depends on the amount of equity you have in your car. If you have a Toyota Camry and owe more than the car is worth, guess who gets to keep your car (hint…you).
  • Rumor #3 – I can’t keep my house if I file for bankruptcy. FALSE! Again, this depends on the amount of equity you have in your house. Many clients differ, however for the most part most clients that come into my office have been victims/participants of the credit crisis and have very little, if any, equity in their household. What does this mean? It means the clients have the option of either (1) surrendering their house or (2) reaffirming (meaning keeping the house if they can make payments).

There are so many more rumors that I can, and will go through, in future blog posts. But again the lesson to be learned is to go to an attorney if you are thinking of filing for bankruptcy. While I understand that many people don’t have the disposable income required, the alternative, going to a “community fixer” is not better and will cost you more money at the end of the day (incorrect filing, exemptions, etc.).