Get Adobe Flash player

Myths about Bankruptcy

Myth 1:

Bankruptcy damages your credit for 10 years.

Not True.  You can begin repairing your credit once the bankruptcy is formally discharged.  The bankruptcy shows on your credit for 7 – 10 years.  If you make timely, full payments on your restructured debt, you will be in the position to slowly improve your credit score.  Afterward, rebuild your credit by spending less than you owe and do not finance more than 40% of your available credit limits.


Everyone has access to my bankruptcy records.

Not True.  Public records do include bankruptcy filings.  The average person’s records are not dug up or actively being searched for this type of information.  Some celebrities or political figures have their records searched by adversaries, but in the general population, this is rarely a concern.


The new bankruptcy law can’t help my situation.

Not True.  A debtor can qualify differently under the new bankruptcy reform laws, but most do qualify for some relief.  Any US citizen can file and in many instances the same relief is available as was the case before the law was amended.

Myth 4.

Only irresponsible people need to file bankruptcy.

Not True.  More than one million people file for bankruptcy each year.  These people certainly have valid, compelling reasons for filing bankruptcy, and it did not make them “bad” people because of the choice they made to restructure their debt.  Loss of a job, underemployment, divorce, illness, credit card companies charging 20 or 30% interest rates, devaluation of homes, predator lending practices, skyrocketing cost of living increases, getting ripped off by the greed on Wall Street, all are legitimate reasons for seeking relief!  Filing for bankruptcy offers a chance to start again for people deserving a second chance.

Myth 5.

I can decide what goes into my bankruptcy and what does not.

Not True.  When you file bankruptcy, you are required to list all your property, all your assets and all your debts, including every creditor.

Myth 6.

It’s too difficult to figure out how to file bankruptcy.

Not True.  Your bankruptcy attorney is an expert at navigating the paperwork involved in filing for bankruptcy, and will guide you on the specifics on filing.  Much of the work can now be done online and communication between us is now streamlined and efficient.

Myth 7.

I’ll never get another house later if I file bankruptcy now.

Not True.  In most cases, opportunities for owning property and building credit will be available immediately following the discharge of your bankruptcy.  Buying and spending within your means and making timely payments will be the most important aspect of augmenting your credit status going forward.

Myth 8.

If I file bankruptcy, I will lose everything I have worked so hard to achieve.

Not True.  In most cases, bankruptcy allows you to maintain your principal residence.    Without filing for bankruptcy, you could be forced to forfeit property to creditors to satisfy your debts.  One misconception is that bankruptcy erases any liens on the property, and this may not be the case universally.  Laws vary State to State, so don’t take chances, speak top an experienced bankruptcy attorney who knows the answers to these important questions.

Myth 9.

If I file for bankruptcy, my spouse has to file too.

Not True.  It’s your choice to file bankruptcy separately or jointly.  The Court allows each couple to weigh what is best in their specific circumstance when it comes to filing together or not.

Myth 10.

Bankruptcy doesn’t clear back taxes.

Not True.  If the tax liability is over 3 years old, it may be discharged in bankruptcy, but there are qualifying conditions to be met.  Often though, some taxes may be cleared through bankruptcy.

Myth 11.

I can only file bankruptcy one time.

Not True.  A person can file bankruptcy more than once.  You can always seek relief under a chapter 13 at any time, but there are time limits as to when you can file between chapters that may affect your discharge.

Myth 12.

Bankruptcy prevents ever getting credit later.

Not True.  As soon as your bankruptcy discharge is filed, your debts will be eliminated and your credit score, with proper management, will begin to improve.  Make timely payments and creditors will see you are trustworthy.

Myth 13.

My creditors can still call me for money after I file for bankruptcy.

Not True.  There is immediate protection for you and your property once a bankruptcy is filed.  Creditors are prohibited from contacting you regarding your debts and can be penalized by law if they disregard these notices.

Myth 14.

Bankruptcy breaks apart families and is more trouble than its worth.

By reducing current debt, families who file for bankruptcy move forward towards brighter futures.  Their decision to file bankruptcy provides welcome relief from overwhelming financial obligations.  The bankruptcy acts as a beacon of light at the end of a dark tunnel, provides a legitimate restructuring of debts and affords you a fresh financial start.

Popularity: 2% [?]

Bookmark and Share

No related posts.