Bankruptcy Myths

Myths about bankruptcy include:

• Bankruptcy is no longer available - Under the recent bankruptcy law changes, bankruptcy was made somewhat more complicated but it is still there. Your bankruptcy attorney can guide you through it.
• You can get rid of all of your debts - Certain debts such as student loans or debts incurred due to fraud cannot be extinguished in Bankruptcy Chapter 7.
• You lose all of your property when you file bankruptcy - This is not true. When filing Chapter 7, you may keep all property exempt from execution including your house, car up to $20,000 in value, furniture, appliances, clothing and more.
• You are a bad person by filing bankruptcy - Most bankruptcies result because of things which a person could not easily avoid including medical emergencies, job loss or divorce.
• You cannot keep your property when filing bankruptcy - When filing for Chapter 7 to extinguish your debts, you give up only non-exempt property. When filing for Chapter 13, you may keep all of your property as you propose a plan to pay back your debts. Meanwhile you receive full bankruptcy protection from lawsuits and wage garnishments.
• When you file for bankruptcy, you will not be able to get credit - False! After completing bankruptcy, you now have no debts and so credit companies will now consider you for loans where previously they would not.
• You cannot get rid of credit card debt or medical bills in bankruptcy - Yes, you may.
• You cannot get bankruptcy if you have a job - False! If your disposable income is below a certain limit you may qualify for Chapter 7 regardless of having a job. If your disposable income is too high, you may still file under Chapter 13.