1. It will be in the paper. – Not unless you are someone noteworthy. When a large corporation has to file it is reported because it is newsworthy. The newspapers just don’t have the room to print everyone filing for bankruptcy. Foreclosure is in the newspaper because it has to be by law.

2. People will come to my house and my things will be auctioned. –Usually this is only in the movies. Most people’s household possessions are exempt (That is bankruptcy speak for safe). This means no, the court is not taking a field trip to your house. It could, if you have a lot of money or a lot of valuable items; but for most people, no.

3. I will Lose all my stuff - Not usually. The law says there are certain things you are allowed to keep even if you file Bankruptcy. These items are called exempt. We will go through the list with you and for many people, they don’t lose anything. Usually if you are up to date on the house and can continue to make the mortgage payments, you can keep the house. The same with the car. There can be problems with luxury cars that are not being leased.

5. Credit Consolidation/ Debt Counseling is better – There are a lot of commercials out there. Many are saying they are non-profit. Non-Profit doesn’t mean the people don’t make any income. Some of these groups are good and some aren’t. You should always check the group out with the Attorney General. Not just the Better Business Bureau. Some groups just take your money and don’t do anything. They wait for the creditor (the person you owe money to) to make an offer in compromise. That is when you owe $10,000 and they offer to settle for $6,000. You are saying great I saved $4,000. Yes you did, except, that next January you will get a 1099 for $4,000 and now pay taxes on that amount! Oh and the settlement offer is also a bad mark on your credit report for 7 years. Sometimes a lower payment plan is worked out. It will take you years to pay the debt off. All the while your credit report gets hit. With a chapter 13, you can achieve the same thing without interest continuing to add up and with court protection. In a chapter 13 if you start to repay and lose your job, then we may be able to convert to a chapter 7 and just get rid of the debt. Try explaining to the debt consolidation group, that you can’t pay them and see how helpful they are.

6. It will get better later. - I have a lot of people say, I am going to get a second or third job and then they will be fine. For some it will work. It can be done. I have seen people do it. However once you owe a year’s salary, it is extremely difficult. Add being out of work to it and it gets really hard. If you are at 30% interest, the debt doubles ever 2 and a half years!

7. Bankruptcy is immoral or the people who file are. – Most of the people I see should have come to see me two years earlier. They have usually depleted retirement accounts and all their savings and any cash they could get and sold valuables. That sounds admirable; but, it leaves the person very vulnerable. Eventually, the person has to file because they have nothing left. They file and they can’t file again for 8 years. Now if something goes wrong, they have no safety net. As for immorality, even the Bible, in Deuteronomy, notes, there should be a release of all debts both public and private every seven years.