MYTHS ABOUT BANKRUPTCY

• Everyone will know I filed for Bankruptcy

• I'll lose everything if I file Bankruptcy

• I'll never get credit again

• It's really hard to file for Bankruptcy:

• If you're married, both spouses have to file Bankruptcy together

• You can't get rid of back taxes through Bankruptcy

• You can max out all of your credit cards and then file Bankruptcy

• You can only file for Bankruptcy once in your life

• Filing Bankruptcy makes you a deadbeat

• Its impossible to file for Bankruptcy after the 2005 law change

 

THE TRUTH BEHIND THE MYTHS

Bankruptcy offers a fresh start from being overburdened and overwhelmed with debts that are spiraling out of control. However, for many, the decision to file Bankruptcy is put off because of horror stories about what might happen. There are so many myths and inaccuracies about filing Bankruptcy there is no surprise that you are concerned. However, most of these myths are simply false. Bankruptcy was designed and implemented to HELP individuals, just like you, get out of difficult financial situations and take control of their lives.

 

 

Everyone will know I filed for Bankruptcy

It is not likely that anyone will find out. Unless you're a prominent person in the community, or a well-known corporation, and the filing is focused on by the media, the chances are very good that the only people that will know about your Bankruptcy will be you and your creditors. Although Bankruptcy is a public legal proceeding, the numbers of people filing are extensive and, as a result, very few publications have the space, the manpower, or the inclination to run all of them.

 

 

I'll lose everything if I file Bankruptcy

This is truly a misconception. While the Bankruptcy laws vary from state to state, every state has exemptions that protect certain kinds of assets. These exemptions typically allow every individual filing Bankruptcy the ability to keep their personal property. This can include your house, car, money in qualified retirement plans, household goods, jewelry, clothing, modest bank accounts, and much more. Most people pass through Bankruptcy without losing anything.

 

 

I'll never get credit again

This is absolutely incorrect. After your Bankruptcy is Discharged, you will start receiving credit card offers almost immediately. After your Bankruptcy, many creditors view you as a desirable credit risk, as you do not have any debt and are able to pay on new credit purchases.

However, if you are planning to purchase a house or car, you may want to do so before you file for bankruptcy. Post-bankruptcy you may face higher interest rates on such large loans. Additionally, if you have a credit card with a zero balance on the day you file for Bankruptcy, you don't have to list it as a creditor since you do not owe any money on it. That means you might be able to keep that card even after the Bankruptcy.

 

 

It's really hard to file for Bankruptcy

It's not hard at all. You are not even required to have an Attorney to file for Bankruptcy. However, it is not recommended that you go through the process without an experienced Attorney.

 

 

If you're married, both spouses have to file Bankruptcy together

This is not true. If one spouse has a significant amount of debt in his/her name, that spouse can file Bankruptcy without the other spouse. However, if spouses have debts that they are both liable for and they want to Discharge them, they should file Bankruptcy together. Otherwise, if only one spouse files Bankruptcy on joint debt obligations, the creditors will simply demand payment for the entire amount from the other spouse that did not file.

 

 

You can't get rid of back taxes through Bankruptcy

In some instances this may be true. However, some taxes can be Discharged in Bankruptcy. In order to Discharge back taxes in Bankruptcy, you have to file all your Returns when due and the taxes owed need to be at least three (3) years old or older.

 

 

You can max out all of your credit cards and then file Bankruptcy

This is incorrect. It would be considered fraud if you intentionally maxed out your credit cards in anticipation of Bankruptcy and then filed for Bankruptcy protection. The Bankruptcy Trustee may review your accounts and will be looking for patterns of usage on your credit cards and when you last used them and what you purchased with them.

 

 

You can only file for Bankruptcy once in your life

This is incorrect. You are able to file for Chapter 7 Bankruptcy once every eight (8) years from the date you last filed. For Chapter 13 Bankruptcy, you can file more often, but you can't have more than one case open at the same time.

 

 

Filing Bankruptcy makes you a deadbeat

This is absolutely false. Clearly, filing Bankruptcy is not something you will typically brag about to your friends and family members. Most people that file Bankruptcy have worked very hard to pay their bills, but are simply unable to do so after considerable effort. Many times the inability to pay bills comes after a life changing situation, such as divorce, loss of a job or an illness. In the end, filing Bankruptcy may be the most responsible decision to make in protecting yourself and your family. Filing Bankruptcy allows you to take control of your life in a positive manner and obtain a fresh start without being further burdened by overwhelming debt obligations.

 

 

Its impossible to file for Bankruptcy after the 2005 law change

This is absolutely false. In 2005 the Bankruptcy Abuse Prevention And Consumer Protection Act (BAPCPA) was adopted. This resulted in many changes to the Bankruptcy laws. Unfortunately, after these changes were adopted, there was a widespread misconception that Bankruptcy was no longer a viable option for consumers with overwhelming debts. However, the BAPCPA laws simply added limited requirements for consumers and attorneys filing for Bankruptcy protection. Indeed, as people begin to investigate their options when facing considerable debt, they are quickly learning that Bankruptcy is an easy and responsible option in many cases.