Surf City Lawyers - May 2018

714-533-9210 MAY 2018


Bankruptcy has a completely flawed stigma surrounding it. I constantly hear how my clients were given the information that “It’s the worst thing you can do” by sources who have no working knowledge of the industry. There’s the assumption that bankruptcy is accepting doomsday in your life and everything is going to go up in flames. People wrongly fear that all of their assets are going to be wiped out, and the life they built will cease to exist. An even more pernicious falsehood is that people assume they’re not eligible for bankruptcy because they aren’t completely broke. It’s a lie. All of it. Not only can you keep your assets in a bankruptcy, but you don’t have to turn over couch cushions to buy groceries, either. People think bankruptcy is admitting failure, when in actuality, it’s bringing success to your life. Sure, it could be that I’m saying this because it’s my job to say it, but let’s take a look at the hard facts of the situation. APRIL SHOWERS BRING MAY FLOWERS How Bankruptcy Can Bring Newfound Beauty Into Your Life

It takes about four to six months to discharge debt through Chapter 7. Once the process is finished, you no longer have the weight of those payments every month. It may knock your score down 50 points, but that’s not nearly as harmful as late payments or collections. Those two are the bane of a credit report. You can make those 50 points up in a matter of months if you are financially responsible.

From there, you’re looking at a recovered credit score and a completely new lease on life. Well, you won’t be leasing — you’ll finally have ownership of your financial future. The choice is yours: You can either endure a few months of the bankruptcy process or suffer under a lifetime of haunting payments. Some people might say, “But I won’t be able to buy a house if I file bankruptcy.” This is, of course, another total fallacy. How long does it take to come up with a down payment for a home in the state of California? You generally have to

save for years to be able to put enough money down to make a smart home purchase. You can get an FHA loan within two years outside of bankruptcy, and a conventional loan within four years. With new cash flow going to a money market account churning out a 3 percent yield on a yearly basis, you’re talking about having a solid down payment in just a couple of years. You are not bound to limitations from bankruptcy. The biggest hurdle to overcome is the pain of your financial situation. Generally, people will only turn to us when their current situation hurts more than the fear of change. It doesn’t have to be that way. With the proper knowledge and understanding of how the system works, you can actually use bankruptcy as a great wealth-building tool. One of my roles is to provide information about all the avenues to becoming debt-free. I’m not a bankruptcy pusher. There are ways to take responsibility for your situation without it. What I care about is giving you the understanding that bankruptcy isn’t running away or giving up on your dreams. Bankruptcy is a tool you can use to change your life from April showers to May flowers.

“People are married to their credit score. They value those numbers more than their blood pressure readings.”

When you dispel debt through a Chapter 7 bankruptcy, you free up that cash flow that was going toward your debt. Your credit score might take a brief hit, but within a few months, your score is driven up because you don’t have the burden of that debt eating up all your money. People are married to their credit scores. They value those numbers more than their blood pressure readings. This prioritization hinders any analysis of the time value of money, which in turn perpetuates the cycle of misinformation.

–Christine Kingston

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