Chapter 7 Bankruptcy Myths Debunked: Part 3

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bankruptcyWe have already devoted two blogs (this one and this one) to the noble cause of debunking bankruptcy myths about chapter 7 bankruptcy. And while we hoped that the book was closed on this unfortunate topic, to echo the words of Michael Corleone in the Godfather III: “just when we thought we were out, they pull us back in!”

And so, while we dream of a day when bankruptcy myths are nowhere to be found (and the people and businesses behind them are shut down or maybe even in jail), until then, let the debunking continue:

Myth #8: You can’t file for divorce while legally separated.

Fact: Spouses can indeed file for divorce while legally separated, although in some cases it may be beneficial to file jointly. Typically, any debts that are incurred after the separation starts is the responsibility of each respective spouse.

It’s also very important for people to realize that if their spouse for bankruptcy and they do not, then creditors may come after them and leave their spouse alone, even if the debt was incurred by both parties.

To learn more about this complex issue, read our article here.

Myth #9: You can only file for bankruptcy once in your lifetime.

Fact: Unless the courts declare otherwise — which they will only do so when an individual is deemed to have broken the law or committed a severe breach of bankruptcy rules — there is no limit to the number of times that an adult individual can declare bankruptcy in their lifetime.

With this in mind, there is a minimum amount of time that must pass before filers can re-file. Currently, the timeframes are:

  • Chapter 7 filing to chapter 7 filing: 8 years from the previous date of filing.
  • Chapter 13 filing to chapter 13 filing: 2 years from the previous date of filing.
  • Chapter 7 filing to chapter 13 filing: 4 years from the previous date of filing.
  • Chapter 13 filing to chapter 7 filing: 6 years from the previous date of filing.

To learn more about timeframes and rules, read our article here.

Myth #10: It’s fine to “fudge the numbers” a little on a bankruptcy filing, or deliberately leave out an asset.

Fact: Deliberately submitting incorrect information, or withholding information, on a bankruptcy filing is against the law and will result in extremely severe penalties. Don’t do it. Ever!

With this being said, the courts understand that honest makes happen. For example, sometimes individuals legitimately forget an old debt, or they’re unaware that their debt has been sold by one creditor to another (this happens quite often, and creditors sometimes forget to send a letter announcing the transfer). Once these oversights are brought to light, individuals are expected to provide an explanation. If it is reasonable, the court will typically not impose any punishment — through it may administer a stern warning.

To learn more about the terrible things that happen to people who lie on their bankruptcy filing, read our article here.

We’re Here to Help

To get the accurate facts about bankruptcy you need — and avoid costly and potentially catastrophic myths — contact the Law Office of Charles H. Huber today. We have been helping individuals file consumer bankruptcy cases for more than three decades. Our experience is your advantage!

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