Truths and Myths about California Bankruptcy

There are a lot of myths surrounding California bankruptcy and how these types of cases are generally handled. While some of these myths are purely misconceptions about the laws and how they work, others are simply the result of misinformation passed back and forth over time. Regardless, it is essential to understand how California bankruptcy actually works, rather than relying on second-hand knowledge. Below are some of the more common myths about bankruptcy and the facts behind those myths.

Myth: Filing for bankruptcy means that I could lose my job.

Fact: The law expressly prohibits employers from firing any employee just because he or she files for bankruptcy. You cannot be fired on the basis of your filing for a California bankruptcy, and if your employer does terminate you due to a bankruptcy filing, you may be able to sue and recover damages.

Myth: If I file for bankruptcy, I’ll never qualify for credit again.

Fact: Filing for bankruptcy wipes the slate clean – when it comes to qualifying for credit, you will have the opportunity to qualify for new credit after your bankruptcy discharge. If you are proactive about rebuilding a positive credit history after bankruptcy, you may find your credit scores improve well beyond what they were before you needed to file.

Myth: If I don’t pay my debts, I could be sent to prison.

Fact: You cannot be put in prison for failing to pay consumer debt. Unless your debts are due to illegal activities, such as willful tax evasion, just owing money to a creditor is not a criminal offense.

Myth: If I file for bankruptcy, I’ll owe taxes on the discharged debt.

Fact: When you file for bankruptcy and your case is discharged, the slate is wiped clean. You don’t owe any of the discharged debts, and you don’t have to pay forgiveness tax on the discharged debt. If you have other financial arrangements, such as a deed in lieu or a short sale of your home, you may owe forgiveness taxes from those transactions, but not from the California bankruptcy.

Myth: If I file for bankruptcy, I will lose all of my possessions.

Fact: California provides two different sets of exemptions, but they are both used for the same purpose – to allow you to keep part, or in some cases, all of your possessions. You will never lose all of your possessions due to a California bankruptcy filing.

It’s easy to be misled by well-meaning friends and family members who give erroneous information about bankruptcy. However, if you want reliable legal advice about California Bankruptcy Law, you should turn to the experts. Each of our reputable, knowledgeable California Bankruptcy Attorneys is an expert in bankruptcy law. By maintaining this constant level of specialization, we are able to offer you the very best legal advice pertaining to California Bankruptcy, no matter your situation. Contact us today and get a free, no-obligation case evaluation as soon as possible. Don’t let a myth stop you from taking advantage of the financial freedom that bankruptcy has to offer.