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| Image courtesy of graur razvan ionut / freedigitalphotos.net |
Despite the plethora of information available online, there
are still bankruptcy myths circulating that are just that—myths. With something as important as bankruptcy,
it’s important to understand the facts and learn how to distinguish them from
fiction.
1. Everyone will know I’ve filed.
While it is
true that bankruptcy is a public record and is searchable as such, unless you
are a high-profile individual, it is unlikely that anyone in your circles will
know that you’ve filed for bankruptcy.
The number of people who file each month in any given city or area often
makes it impossible for the media to focus on printing names; although in some
smaller communities, the newspapers still do this.
2. If I file Chapter 7, I don’t have to pay
back any of my debts.
This is
certainly a nice thought but it’s a myth, nonetheless. Certain debts such as alimony, child support,
student loans and fines for criminal acts must still be paid, even after filing
for Chapter 7.
3. If I file bankruptcy, I’ll lose my house,
car, possessions, etc.
It is important
to know that each state provides exemptions to bankruptcy filers, allowing them
to keep a considerable amount of their property—up to a particular value. A bankruptcy attorney will be able to explain
in detail what you may or may not lose in the process of filing.
4. I can kiss credit goodbye if I file.
Although for 2-4
years, you might only qualify for subprime loans, there are still many lenders
who are more than happy to provide credit to people who have filed for bankruptcy—even
Chapter 7 bankruptcy.
5. If my husband/wife files, that means I have
to file, too.
This situation
is highly dependent on whether both spouses are liable for the debt. If both names are on most debt, then yes, it
would make more sense for both spouses to file.
However, if only one spouse’s name is on a considerable amount of debt,
that spouse can file, leaving the other spouse’s credit unscathed.
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