When you hear the word “bankruptcy,” most people would automatically mean something bad. Although bankruptcy isn’t something people strive for, it’s not always the end of the world like many people believe. Attorney at Law Dennis Banning broke down some of the common misconceptions surrounding bankruptcy.
Bankruptcy is the legally declared inability of an individual or an organization to pay their creditors. Creditors may file a bankruptcy petition against a debtor in an effort to recoup a portion of what they are owed. In the majority of cases, however, bankruptcy is initiated by the debtor.
The primary purposes of bankruptcy are to give an honest debtor, whether it be an individual or a business entity, a “fresh start” in life by relieving the debtor of most debts, and to repay creditors in an orderly manner to the extent that the debtor has the means available for payment. As such, bankruptcy allows debtors to be relieved from the legal obligation to pay most debts by submitting their non-exempt assets, if any, to the jurisdiction of the bankruptcy court for eventual distribution among their creditors. From the time a Bankruptcy Petition is filed until its conclusion, the debtor is protected from most non-bankruptcy legal action by creditors through a legally imposed stay. Creditors cannot garnish wages, pursue related lawsuits, or attempt to compel payment.
Some common misconceptions about bankruptcy:
- “I have to give up all my possessions.” This is not true. The Bankruptcy Code is very generous in the exemptions it gives people to protect their assets.
- “I won’t ever be able to buy a house.” This is not true. Most people can qualify for anew home in about two years, sometimes less.
- “Creditors won’t sue me because of COVID-19, or lawsuits can’t go forward because of COVID-19.” This is not true. It may take longer in the courts because of delays, but creditors are still suing people.
Bankruptcy law is actually one of the most predictable and affordable areas of the law when the benefits are considered. Of course, it takes a highly competent and experienced attorney to properly handle bankruptcy law cases. At New Mexico Financial and Family Law, their bankruptcy clients are usually happy clients. Emerging from bankruptcy with a fresh start really takes a load off of people’s shoulders.
At New Mexico Financial and Family Law, they represent honest people, like yourself, who are having difficulties beyond their means and control. Congress passed bankruptcy laws to help people just like you. However, if you can afford to pay your debts, by all means, please do. The law provides for stiff penalties for those who abuse the bankruptcy process. But if you cannot afford to pay your debts, and there does not seem to be any light at the end of the tunnel, there is a good chance that we can help.