1. Bankruptcy will ruin my credit.
Probably not true. In fact for most people that file bankruptcy, their
credit score does not drop at all.
2. Everyone will know that you have filed for bankruptcy.
Not true. While a bankruptcy is a public legal proceeding, unless you are
a prominent person or a major corporation, it is very unlikely that anyone
but your creditors will know you have filed for bankruptcy. Most newspapers
do not report routine bankruptcy filings.
Certain public information is reported, such as:
- Real estate transactions
- And some other public filings
However, most newspapers do
not publish lists of the people who have filed bankruptcy. Check the newspapers
in your area. The most likely way that your friends or family members
will find out that you filed bankruptcy is if you tell someone and then
the secret spreads.
3. You will lose everything that you own.
Not true. When filing for bankruptcy you are allowed to “exempt”
a certain amount of property. This is the property that you are allowed
to keep and which will not be sold for your creditors.
The amount of property you are allowed to keep is very generous. Most people
that file bankruptcy are allowed to keep all of their property.
So, instead of losing everything you own, the chances are good that you
would keep everything that you own. Part of your free initial consultation
would be to analyze your property and to determine whether it is likely
that you would be able to fully exempt all of it.
4. You are a bad person for filing bankruptcy.
Not true. Over 2,000 people file for bankruptcy every day, and it’s
not because they are bad people. Bankruptcy is a solution that can help
good people through a bad time.
Many people whose names you might recognize have filed bankruptcy:
- Walt Disney
- Henry Ford
- Charles Goodyear
- Milton Hershey
- H.J. Heinz
- P.T. Barnum
- President Thomas Jefferson
- President Abraham Lincoln (twice)
- President Ulysses S. Grant
- President William McKinley
5. You can pick and choose what to put into bankruptcy.
Not true. You have to list all of the debts that you owe and property that
you own when you file for bankruptcy. If you want to continue paying a
certain creditor after filing for bankruptcy you can do that, but it is
illegal to not disclose all of your debts when filing a bankruptcy petition.
6. It’s hard to file for bankruptcy.
Not true. There is a lot of paperwork involved, but competent assistance
can remove unnecessary guesswork and make the bankruptcy process much smoother.
7. You will never be able to own property again.
Not true. After filing for bankruptcy, you will be able to own whatever
you can afford. If you have the money, no law prevents you from buying
anything you want after your bankruptcy case. (Of course, you could still
have to qualify for a loan – on that point, see Myth #1.)