Bankruptcy Myths

Know the truth about bankruptcy and how it helps people with unmanageable debt.

Bankruptcy can seem scary, especially if you’ve heard many of the myths and misconceptions about bankruptcy. With more and more people needing the debt relief of bankruptcy, it is important for them and their friends and family to know the truth.

The law has changed; there is no more bankruptcy.

Not true. The new law introduced more steps and more paperwork, but there are also more benefits.

Everyone will know you filed for bankruptcy.

Bankruptcy is part of the public record, but there is so much information on so many filings, the only people who will likely know are your creditors and the people you choose to tell.

You will lose everything you have.

Most people do not lose anything except their debts. Each state has exemptions for property like household goods, retirement plans, tools of the trade and even equity in your home and car.

You will never be able to own anything again.

Absolutely false. Your credit and ability to buy will return quickly. Many of our clients are offered new credit cards and car loans as soon as debts are discharged.

You will never get credit again.

Not true. Getting rid of debt through bankruptcy makes you a good credit risk. Bankruptcy helps you rebuild the credit you lost.

Filing bankruptcy will hurt your credit for 10 years.

Bankruptcy will be reported on your credit report for 10 years, but most people’s credit scores improve after filing. Many lenders feel that your problems are behind you.

If you’re married, you both have to file.

Not true. If one spouse has debt and the other doesn’t, there is no legal requirement that both must file.

It’s hard to file bankruptcy.

No, it isn’t. That myth started when the law was changed, but it isn’t difficult at all. An experienced attorney can make sure your filing meets all the rules.

Only deadbeats file for bankruptcy.

No, absolutely not. The overwhelming majority of filers are good, decent, hard-working people who ran into some insurmountable financial problems brought on by an illness, divorce or separation, a business failure, loss of a job or bad judgment at a young age.

Filing bankruptcy means you’re a bad person.

No. More than 1 million Americans file for bankruptcy every year. It is a straightforward, honest, legal way to deal with debts that cannot be paid.

You can only file for bankruptcy once.

No, not true. While we hope you don’t need to, you can file for Chapter 7 again after eight years – and again eight years later. You can file Chapter 13 as often as necessary.

Even after you file, creditors will harass you and your family.

Not true at all. The bankruptcy court orders all creditors to leave you alone. This “automatic stay” means no phone calls, no letters, no lawsuits, no repossessions, no foreclosures. Once you file, creditors must leave you alone or face consequences from the federal bankruptcy court.

Call 1-877-ONE-DEBT and talk to a lawyer about how bankruptcy works.

Do not believe the myths. Bankruptcy has been a part of our American laws throughout our history.  The bankruptcy laws were designed to help people get a fresh start, not punish them. You initial consultation with an attorney at Bond & Botes is FREE.