Some common myths about filing for bankruptcy.

While it's difficult, it's not the end of the world.

While there are so many mysteries about what the outcome of a bankruptcy filing would be, we thought that we should dispel some common myths about the what to expect when you do file for bankruptcy.


A bankruptcy will take everything I have from me.

There’s a mental that many have of some barrel moustache auctioneer will sell everything you own on your front lawn. While the bankruptcy laws vary from state to state, almost all will have specifics exemptions that protect certain types of assets. The list usually includes your home, your car, money in qualified retirement plans, personal household goods and clothing.

The bankruptcy filing process is very difficult.

While it possible to perform the filing yourself, a consultation with a competent attorney wouldn’t hurt. The resources available on the web make the process rather easy. Just beware of scams and offers that sound too good to be true.

A Chapter 7 bankruptcy will wipe out all of my debts.

This would be great but it’s not the case. There are numerous types of debts that must remain after the case is closed. Child support and alimony, student loans, IRS liens and debts your incurred as the result of fraud will remain. There are other circumstances as well; you should consult a competent attorney if you have questions.

I won’t have access to credit after the filing.

Because of the fact that you cannot declare bankruptcy for another 6 years, it won't be long before you're getting credit offers again. The rub is that they will be at substantially higher rates and may even have to be secured.

When I file for bankruptcy, I have to take down my spouse with me.

Not the case. In most cases the debts involved in a bankruptcy may be in their name only. If the debts are not attached to substantial assets held by the other spouse, it would make sense to have only one spouse file. If the debts are in both names, then they should file together.

I’ll be the laughing stock of the neighborhood.

It’s not like the filings make the front page of the paper. There are so many filings on a daily and weekly basis, the only way for someone to discover your filing is to actually find the paperwork in the courts.
 

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