Bankruptcy Myths, Mistakes, and Misconceptions

BANKRUPTCY Myths, Mistakes, and Misconceptions (ΜΥTΗ #1 Bankruptcy is an absolute last resort Many individuals, families, and businesses turn to bankruptcy each year Debtors' median average monthly income: 1,221,091 in U.S. in 2012 69,112 in Illinois in 2012 $2,781 Most bankruptcies are filed by individuals and families 3% 126% businesses men alone +30% women alone 97% +44% couples non-business Bankruptcy is rarely caused by bad spending habits ++ 1 in 2 debtors has experienced a major medical problem 2 in 3 debtors have lost a job MYTH #2 Filing for bankruptcy means losing everything Filing for bankruptcy stops immediate financial problems Collection calls Lawsuits Judgments UCC 1 filings Asset sales Foreclosure Repossession Wage garnishment IRS collection activity Chapter 13 bankruptcy allows you to control debt and keep assets 3-5 year payment plan Debt is either consolidated or forgiven 30% of all bankruptcies Chapter 7 bankruptcy allows you to eliminate debt and keep property exempt under Illinois law 69% of all bankruptcies Illinois exemptions: * Real Estate: $15,000 * Vehicle: $2,400 O Personal Property: $4,000 Z Earned but unpaid wages: 85% ttt Alimony and child support O Health and disability benefits МYTH #3 Bankruptcy permanently ruins credit and loan opportunities Credit scores and credit reports recover after debts are discharged After 0-3 months: After 7-10 years: CREDIT SCORE BANKRUPTCY Credit score begins improving with responsible spending and credit management Bankruptcy no longer appears on credit report - much faster credit recovery than pre-bankruptcy in most high debt cases Loans and credit lines are available after bankruptcy BANK LOAN $-- Loans available immediately with higher interest rates 12–18 months New loans to get approved for unsecured credit card help rebuild credit Bankruptcy improves credit score now and in the future Immediate improvements are minor 700s - Typical credit score after 2–3 years of good spending Sources: Provided by: www.uscourts.gov/uscourts/Statistics/BankruptcyStatistics/Ba nkruptcyFilings/2012/1212_f2.pdf www.bankruptcyaction.com/USbankstats.htm www.illinoisbankruptcy.com/exemptions.html CUTLER & ASSOCIATES, LTD. www.smartmoney.com/borrow/debt-strategies/declaring-ba nkruptcy-can-improve-your-credit-score-20681 COMPASSIONATE• PERSONAL • CONFİDENTIAL www.bankruptcylawyersinchicagosuburbs.com BANKRUPTCY Myths, Mistakes, and Misconceptions (ΜΥTΗ #1 Bankruptcy is an absolute last resort Many individuals, families, and businesses turn to bankruptcy each year Debtors' median average monthly income: 1,221,091 in U.S. in 2012 69,112 in Illinois in 2012 $2,781 Most bankruptcies are filed by individuals and families 3% 126% businesses men alone +30% women alone 97% +44% couples non-business Bankruptcy is rarely caused by bad spending habits ++ 1 in 2 debtors has experienced a major medical problem 2 in 3 debtors have lost a job MYTH #2 Filing for bankruptcy means losing everything Filing for bankruptcy stops immediate financial problems Collection calls Lawsuits Judgments UCC 1 filings Asset sales Foreclosure Repossession Wage garnishment IRS collection activity Chapter 13 bankruptcy allows you to control debt and keep assets 3-5 year payment plan Debt is either consolidated or forgiven 30% of all bankruptcies Chapter 7 bankruptcy allows you to eliminate debt and keep property exempt under Illinois law 69% of all bankruptcies Illinois exemptions: * Real Estate: $15,000 * Vehicle: $2,400 O Personal Property: $4,000 Z Earned but unpaid wages: 85% ttt Alimony and child support O Health and disability benefits МYTH #3 Bankruptcy permanently ruins credit and loan opportunities Credit scores and credit reports recover after debts are discharged After 0-3 months: After 7-10 years: CREDIT SCORE BANKRUPTCY Credit score begins improving with responsible spending and credit management Bankruptcy no longer appears on credit report - much faster credit recovery than pre-bankruptcy in most high debt cases Loans and credit lines are available after bankruptcy BANK LOAN $-- Loans available immediately with higher interest rates 12–18 months New loans to get approved for unsecured credit card help rebuild credit Bankruptcy improves credit score now and in the future Immediate improvements are minor 700s - Typical credit score after 2–3 years of good spending Sources: Provided by: www.uscourts.gov/uscourts/Statistics/BankruptcyStatistics/Ba nkruptcyFilings/2012/1212_f2.pdf www.bankruptcyaction.com/USbankstats.htm www.illinoisbankruptcy.com/exemptions.html CUTLER & ASSOCIATES, LTD. www.smartmoney.com/borrow/debt-strategies/declaring-ba nkruptcy-can-improve-your-credit-score-20681 COMPASSIONATE• PERSONAL • CONFİDENTIAL www.bankruptcylawyersinchicagosuburbs.com