Myths and urban legends abound on the internet. It’s easy to take a picture and slap a factual claim on it. Maybe it’s a wrongly attributed quotation, or the claim of a conspiracy theorist. When I see one of these quotes or claims that just seem a little off, I turn to the urban legend debunkers at Snopes. Similar urban legends exist about bankruptcy and debt resolution. Whether it’s a claim by a debt settlement scam artist that President Obama was going to help you get out of debt, or the terrifying story of a man just down the street who filed bankruptcy and lost his house, his car and his dog, you need a resource to help you figure out truth from legend. As they say, every urban legend comes from a grain of truth, we’ll help you find that grain and ignore the rest.
Many People Believe That: They have to be 6 months behind on their credit cards in order to file bankruptcy.
This is an interesting myth because it potentially pulls from a lot of different truths. 6 months comes up a lot in bankruptcy contexts. Venue is determined by where you have lived in the prior 180 days before filing. 180 days, 6 months. Inheritances received within 6 months of a bankruptcy filing are property of the bankruptcy estate. The credit counseling certificate must have been issued within 180 days before the date of filing the bankruptcy petition. There are others. So you see, 6 months and bankruptcy has a strong connection.
There are also connections between incurring debt and 6 months. Generally it is a bad idea to incur debt before you file and it is FRAUD to incur debt after you make the decision to file with the intention that the debt be discharged. This means don’t go running up those credit cards. Perhaps these are the sources of the myth that you have to be delinquent before filing. Whatever the source, a myth it is.
Actually, I sometimes require my clients continue to make minimum payments on some cards up to the point of filing. These are usually special circumstances and done to avoid a larger cost down the road.
So, do you need to be delinquent to file bankruptcy? No, absolutely not. In fact, you shouldn’t wait for the shoe to drop if you’re running into financial difficulties. The solutions may not be quick, but tackling problems before they become a crisis is usually a lot cheaper financially and emotionally.
Are you struggling with debt and need help? Call (410) 929-0330 for a FREE consultation.
About the Author: William Grafton is a Maryland Bankruptcy Lawyer and Co-Owner of the Grafton Firm, LLC. He has written, lectured, and educated on credit related topics for nearly 10 years and is happy to be bringing his expertise to the Baltimore Metro area.