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Patricia Johnson

(530) 247-7285

2985 Bechelli Lane, Suite 110 · Redding, CA 96002

  • Chapter 7 Bankruptcy

    If you owe a large amount of debt, you may prefer to file a Chapter 7 Bankruptcy plan.

  • Chapter 13 Bankruptcy

    If you own a home and are behind in the payments or you have equity above the exempt amount, you can possibly protect it from foreclosure under a Chapter 13 Bankruptcy plan.

  • Debt Counseling

    Debt counseling can provide relief and give you the best possible course of action towards tackling your debt.

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8 Common Misconceptions About Bankruptcy

Redding Bankruptcy Attorney Patricia Johnson Explains the Facts

Because bankruptcy law is so complex, and people hear about it in bits and pieces from the news and well-meaning friends and family members, there are many rumors out there. Getting the truth about bankruptcy can eliminate any anxiety you may feel about the process that may prevent you from getting the debt relief you need. Redding bankruptcy attorney Patricia Johnson provides truthful information to people who have hit a rough spot financially, so they can know what to really expect in a bankruptcy proceeding. She wants people to understand their situations and choose the alternatives that will put them in the best shape possible.

Common Misconceptions

  1. Filing for bankruptcy means you do not have a dime to your name.

    2. This statement is incorrect. Bankruptcy simply means that a person cannot pay the bills that they have due. The government has set up bankruptcy laws to allow people to repair their financial positions, not to leave them with nothing.  In fact, it is better to get help soon and file for bankruptcy before your finances have completely dwindled.

  2. Filing for bankruptcy will ruin my credit forever.

    3. While bankruptcy does stay on your credit score for a number of years, it does not ruin it forever, and there is a positive side as well. Once you have filed for bankruptcy, you begin your credit record with a clean slate. You can begin re-establishing credit by making timely payments on the property you keep, as well as future purchases. If you have already been drowning in debt for any length of time, this is often preferable to trying to pay off an impossible amount of debt.

  3. People will think I am a bad or lazy person if I file for bankruptcy.

    4. Actually, the vast majority of people who file for bankruptcy do so after an unforeseeable, life-altering event, such as a major injury, job loss or divorce. The events that drive people to bankruptcy are often beyond their control and do not reflect on them as people.

  4. A bankruptcy discharges all of my debts. 

    5. A bankruptcy does not eliminate all debts. Certain types will remain afterward, including child support, student loans, fraud and most taxes. Home and auto loans, if  you wish to keep the items, may be able to be reduced. Most other debts are eligible for discharge under bankruptcy laws though.

  5. I can max out my credit cards before filing for bankruptcy, and all of the charges will disappear once I file.

    6. Such behavior is not acceptable under bankruptcy laws. A court will scrutinize the actions you took leading up to bankruptcy to check for fraud. It is crucial that you engage the help of an attorney to ensure that none of your financial transactions preceding a bankruptcy even appear suspicious, and that you prepare for a bankruptcy lawfully.

  6. In the case of married couples, both spouses have to file. 

    7. It depends. If one spouse has most of the debt in his name, he may choose to file alone but in California, usually both will elect to file as this is a ‘community property’ state and debts of one are the debts of the other if incurred while married. However, if the debts were incurred prior to the marriage, then only that spouse needs to file, unless there are other joint debts they wish to eliminate.

  7. If I file Chapter 13 bankruptcy, I will have to pay back every bit of my debt.

    8. Chapter 13 bankruptcy payment plans vary from person to person, depending on the amount of disposable income you have, the value of your non-exempt assets, and the total amount of debt you owe. Usually, people only have to pay back a small portion of their debt. Plus, many second mortgages and part of the debt on some vehicles can be eliminated in a Chapter 13 [but not in a Chapter 7]. 

  8. I will never be able to purchase a new home after lenders see that I have filed for bankruptcy.

    9. Actually, lenders are more likely to look at your recent credit history than delve into your past. Therefore, if you make wiser choices financially after your bankruptcy, you may be in a good position to get a mortgage a couple years after filing.

Filing for bankruptcy is a big step, but having the facts can help you know exactly what to expect before, during and afterward. Redding bankruptcy lawyer Patricia Johnson cares about helping each of her clients find better financial circumstances and wants them to feel comfortable each step of the way. She can look at your situation and point you in the right direction. Contact our law firm to set up a free, personal consultation with her today.

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