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I hear things, that are said by creditors, by friends, co-workers, credit counselors,
and even by lawyers who may be without a good knowledge of bankruptcy law, that are just WRONG! Scroll down to see
some of them ... and please let me know if you have heard any of these rumors or if you hear any new ones.
People hear these rumors, and pass them on to others. They may want to help, but bad information isn't
helping anyone.
Creditors don't have your best interest at heart and unfortunately, many blatantly lie
to people.
The Internet is a wonderful tool. I use it all the time.
But the Internet is open to anyone who wants to post or open a business. The Internet may give you just enough
information to be dangerous. There is information that I call "advice that is correct, except when it isn't,"
because while there is a lot of good advice on the Internet, it can't possibly address each individual person's case.
There also is bad advice on the Internet and you need to know how to tell which is good and which is not.
(If you knew that already, you wouldn't be looking for answers!)
I get maddest about bad advice from credit counselors or debt management
counselors, or lawyers who don't understand the law, because people contact them thinking they are going to get help
from a professional who knows the answer. These people are mostly
online or via telephone. They usually are not local or available for personal appointments to review and discuss
your situation.
I often hear very bad advice that has been given by some
of these agencies. Many times I believe they are either lying, or at best badly mistaken. Remember that if
someone is not a licensed lawyer in North Carolina, it is illegal for them to give any legal advice to a North Carolina
resident. They shouldn't anyway, because they often don't know the law.
Almost anyone can call themselves a credit counselor and there are
many scams that get your money, without resolving your problems. Be very careful, and if you are going to see a credit
counselor, please be sure to seek a reputable agency, preferably one that will meet you in person, not on the phone or over
the Internet. They should start with your ability to have enough money to live on, and then if money is left over, concentrate
on getting the debt paid off. Avoid any counselor who starts with a repayment program without much regard to how
you are going to live once you make the payments to them.
These agencies sometimes get a cut from the creditors. They may
get paid for any months they can collect from you, so they want you in the program whether it works for you, or not.
Some of the people you talk to get paid just for signing you up, for making a payment or two, or they get paid a fee
up front before they begin to pay/negotiate your debts. So even if they know you will not be able to make payments (and
pay your other expenses), they may want you signed up so they make money in the short term.
Note: If you want to meet with a credit counselor for a debt management plan, the only
one I recommend is the local chapter of United Family Services Consumer Credit Counseling Service (CCCS) if you
want to speak to a credit counselor, because I know they 1) meet you and 2) work with your family income budget.
You do not have to go to a credit counselor first. You can still
speak to an attorney to get the facts on bankruptcy and other financial issues. If appropriate, I do not hesitate to
refer someone to United Family Services if I think they can help someone avoid bankruptcy.
Things heard from bill collectors
recently:
The debt is "under investigation" and not
eligible for bankruptcy under the new law ...
NO. Under investigation? By who? There
is no agency that investigates debts other than the creditor themselves, and they are not the ones who determine
if a debt is eligible for bankruptcy or not! If they had their way, no debt would be, but they are not the ones who
decide. While it is true that some debts aren't discharged in bankruptcy, many are. Your attorney is able to spot
most of the debts that can't be discharged and discuss whether or not your debts are of that sort. When you
meet an attorney, the recommendation to file is always based upon what you are eligible for. When pressed for
information, the creditor stated that the information was "confidential" and hung up, which probably meant he should have
said ..."confidentially, I don't have a leg to stand on!"
Filing bankruptcy is a big mistake and
you (or your attorney) will be reported to the proper authorities if you file.
NO. If an experienced bankruptcy attorney recommends
this legal protection to you, then it is probably not a big mistake. There are no "authorities" to report anyone to,
except the United States Bankruptcy Court. Once a bankruptcy case is filed, the Bankruptcy Judge is the ultimate
authority, and your attorney will know what is required by the law and the Bankruptcy Court. Your attorney
will guide you through the process in a lawful manner, and best suited to help you.
You have to go to jail before you can file
bankruptcy.
NO! There is no basis to a comment like this. Bankruptcy
has always been a place for honest people to seek shelter and get a fresh start. While the benefits are being cut, bankruptcy
will still be available for honest people, with no jail time involved. (And yes, someone actually asked me this question
because a creditor told them it was true.)
The new bankruptcy law won't let you discharge
my debt anymore. The new law won't let you discharge credit cards anymore. The new law won't let
you discharge medical bills anymore. The new law won't let you ...
NO. I have heard several people who said that a creditor
told them that their debt can't be discharged in bankruptcy at all. There are some types of special debts that are not
discharged in bankruptcy, like some taxes, student loans or child support. But even with some of those, bankruptcy might
help. Some of the people I have heard this from said that they heard this from creditors, collection agencies or
even their friends, and it just wasn't true. Speak to an attorney to find out if your debts are, or are not,
discharged in bankruptcy.
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