Listed below are some of the more common concerns clients will express: |
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• Will I be arrested and put in jail for not paying my debts? Unless a client has committed a criminal act of fraud, they will not be arrested, or jailed, for failing to pay their debts. "Debtors prison" has long been abolished. Failing to pay debts is a civil matter and it is resolved in civil, not criminal, court. • Is bankruptcy wrong and immoral? Bankruptcy is both legal and moral so long as it is not being done in a fraudulent manner. It is authorized by the U.S. Constitution and approved of in biblical passages. • Am I allowed to file for bankruptcy under the new law? Many people believe that the changes in the bankruptcy law (Bankruptcy Abuse Prevention and Consumer Protection Act- BAPCPA), which became effective in October 2005 prevents most individual debtors from filing for a Chapter 7 relief. They are wrong. While it is more complicated and expensive to file most people who need to file will meet the eligibility requirements for filing a Chapter 7 case. • Will I lose all of my property and income if I file for bankruptcy? Much, if not all, of a low income debtor's personal property, such as normal wearing apparel and household goods and furnishings, are exempt and will not have to be surrendered to the trustee, nor can they be taken by a creditor. Certain forms of income are exempt from execution, including most pensions, Social Security, S.S.I., unemployment insurance benefits, and public assistance. • Can I file for bankruptcy if I am unemployed and have no income? A person can file under either Chapter 7 or Chapter 13 if they are working. Which type of bankruptcy they file under will be determined by their current monthly income and by the type and value of the assets the debtor needs to save. • Is bankruptcy only available to businesses? Both Chapter 7 and Chapter 13 are specifically for individuals filing personal bankruptcy. |
Client Concerns and Misconceptions
Part 1 of 2