3 OF THE WORST PIECES OF ADVICE I’VE EVER HEARD ABOUT BANKRUPTCY

As an experienced Central Florida Bankruptcy attorney, I often hear people trying to give advice on bankruptcy. While I’m sure their intentions are good, often their advice isn’t.  Sometimes it’s incomplete, sometimes it’s inaccurate, and sometimes it’s just flat out wrong. Here is some of the worst advice I’ve heard about bankruptcy.

1. ‘You know that if you declare bankruptcy you’ll ruin your financial life forever.’  This must be one of the most ridiculous sentiments I’ve encountered. It’s just not true. In fact, if a debtor can be eligible to receive an FHA loan just two (2) years after a Chapter 7 discharge, and only 1 year, with the trustee’s consent, after declaring a Chapter 13 bankruptcy.* Does that sound ruined to you?  Maybe it’s just me, but two years seems a long way from forever. 
*This information is accurate as of June, 2024.

2. ‘When you take out a loan, it is your obligation to pay back the bank; bankruptcy and foreclosure are the easy way out.’ Really? Obligation to pay back the banks? You mean the exact same banks that have taken billions of dollars in taxpayer bailouts because of their bad loans? Why is it acceptable for banks to write off their mistakes but not you? Sounds like a double standard to me; this would be laughable if it weren’t so sad. Remember, the right to file bankruptcy is enshrined in the United States Constitution; it was there even before the Bill of Rights. 

3. ‘You don’t need to file for bankruptcy or seek foreclosure protection. Credit Counseling can help you pay off your debt and lower your monthly payments.’  Yes.  This could be true. Maybe. However, this is not always the case. If you fail to complete the entire program, you could wind up in the same situation you were in when you started; trying to figure out if you need to file for bankruptcy protection or negotiate a foreclosure. The problem now is that you’ve wasted precious time that you could have used to rebuild your financial life. Many credit counselors get a cut of your payment before forwarding the rest to the bank so, money that could have gone to pay your debt, is now in a credit counselors’ pocket. Also, a credit counselor is not qualified (or allowed) to give you a legal opinion about bankruptcy and your legal options; any opinions that they give you are likely just to get you to sign up for their services. Often what they pass off as financial advice is really just bad legal advice. Remember, if a Credit Counselor is not an attorney, they’re a salesman. My advice? Run away. Fast. Don’t fall for the trap; know all the options regarding bankruptcy and foreclosure and how they relate to your individual situation.

There are a lot of people out there willing to give advice about bankruptcy. Unfortunately, listening to misguided or incorrect advice can lead to significant legal and financial consequences. Want some good advice about Bankruptcy? Call me, John Russo, an experienced Central Florida Bankruptcy Attorney.