Updated: Sep 21, 2020
The idea of filing for bankruptcy evokes fear and despair into many, but it’s important to consider whether filing a bankruptcy case might be in your best financial interests. Bankruptcy can be used to not only ease the burden of debt but can also be used to save assets, such as a car or a house. Below are some common bankruptcy questions and misunderstandings.
Will I lose everything if I file for bankruptcy? Absolutely not! Most people that file for bankruptcy don’t lose anything. This is due to what we call “exemptions”. Exemptions allow filers to keep certain amounts of property to start their new financial futures after their bankruptcy case is over.
Can I keep my house/car? Of course. Those “exemptions” come into play again and allow you to keep your house and/or vehicle. Whether it makes financial sense to keep these items is a different question that should be reviewed with your attorney.
Can I keep my retirement account? Yes! Retirement accounts are actually considered entirely exempt in a bankruptcy case. It is rarely a good idea to cash out a retirement account to pay debt in lieu of filing for bankruptcy. Cashing out a retirement account can cost you fees and taxes, not to mention put your retirement plans into a tailspin.
Will my neighbors know? I have filed over 1,000 bankruptcy cases and I have never had a client tell me their neighbor/best friend/doctor/etc found out about their bankruptcy case. While bankruptcy filings are public, someone would need to subscribe to the Federal Court PACER system to get this information.
Does filing for bankruptcy mean I’m a failure? Absolutely not. Statistics show that at least 1 in 10 people file for bankruptcy at some point in their lives. Many business leaders have filed. Even prominent financial “advice” columnists, like Dave Ramsey, have filed for bankruptcy! Bankruptcy is a business decision to make on behalf of the best interests of you and your family’s future.
What if I’m behind in my car/house payments? Bankruptcy can help fix this by reorganizing your debt to allow you to catch up on payments over a period of up to five (5) years!
Can I file for bankruptcy on taxes? Yes! Some taxes are “dischargeable” in bankruptcy while others can be set up on a payment plan, minus fees and interest.
Can I file for bankruptcy on student loans?Yes!Most student loans are “non-dischargeable” in bankruptcy, however, a bankruptcy case can help you manage your student loan debt if you are being garnished or sued.
Ready to learn more? Call our office today to schedule a free bankruptcy consultation. Attorney Allison Greenlee Korr handles all bankruptcy matters in the Western District of Michigan. 269-381-4471