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Bankruptcy Myths in New Hampshire

Bankruptcy is often shrouded in myths and a cloud of misinformation. The changing laws in New Hampshire can also make the process confusing. The most important thing anyone considering bankruptcy can do is to seek out the most up-to-date and true information available. The Law Office of Joseph M. Annutto can separate myth from fact and help you decide the best course of action for your particular situation.

Myth:

The only people who have to file for bankruptcy are those who are failures at handling their finances, those who just can’t live within their means, or those who are squander what they have.

Fact:

Anyone, regardless of how fiscally responsible they may be, can find themselves in a position where bankruptcy is the only option for regaining control over finances. Most people who file for bankruptcy in New Hampshire are hard-working and never expected to be in that position. In fact, the most common reasons for filing bankruptcy include: losing a job unexpectedly, divorce, medical bills, and being hit hard by the recession.

Myth:

If you file bankruptcy, you will lose everything including your house.

Fact:

The purpose of bankruptcy is to help you get the fresh start you need, not to leave you more indigent or without anything you have worked hard to obtain. There are both state and federal exemptions that will give you the chance to keep certain kinds of property. If you qualify for exemptions, you can keep your tools of the trade, home equity up to $100,000, some kinds of personal property, and certain types of livestock. You will also possibly be able to keep certain benefits and tax exempt retirement accounts. Chapter 13 bankruptcy can allow you to keep most assets while you work to repay your debts.

Myth:

Your credit will be ruined forever if you file for bankruptcy.

Fact:

Bankruptcy can remain on your credit report for up to ten years and will affect your credit score. However, just how much of an affect bankruptcy will have varies from person to person. After bankruptcy is filed, certain debts will be discharged. This will improve your debt ratio and possibly free up funds to pay down other debt. While a score may drop at first, it may be easier to gain credit points as you work to stay current with payments and regain your financial footing after you file for bankruptcy.

Myth

People file for bankruptcy as a way to get out of paying back what they owe creditors.

Truth:

Bankruptcy has had a number of stigmas attached to it for a long time. One being that it is the easy way out of having to pay what is owed. You can’t go out and charge a ton of things and then file for bankruptcy to get out of paying. Bankruptcy court must approve your filing and will look closely into spending habits and credit use to prevent anyone from trying to take advantage of the system. While certain debts are discharged, the liquidation process repays many debts. Most creditors will get paid back and you will need to stay current on any payment plans between you and those creditors. Also, certain types of debt can’t be discharged at all. This includes child support, alimony, student loans, some taxes, and any court ordered restitution.

Experienced Bankruptcy Attorney

Before believing in old myths or relying on inaccurate or out-of-date information about bankruptcy in general, talk to the bankruptcy attorneys at the Law Office of Joseph M. Annutto and discover the facts. Our attorneys understand the myths out there and also understand the sensitivity of the matter. We will ensure you know the facts and make the best decision for your particular situation.

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