Common Misconceptions About Bankruptcy

People may talk about bankruptcy without consulting a qualified attorney. Consequently, there are many myths and misconceptions about bankruptcy. We will attempt to clarify or dispel 11 such myths and misconceptions here.

  1. All of my debts will be discharged in Chapter 7. In Chapter 7, you can discharge only specific types of debts. Debts that cannot be discharged in bankruptcy include child support, alimony payments, most student loans and other specific debts.

  2. I will lose my house, car and possessions in bankruptcy. This myth keeps many individuals from getting the debt relief they need. In Ohio, specific assets are exempt from bankruptcy. This means that you may be able to keep your car, house, personal items and other assets when you file.

  3. I'll never be able to get a credit card again. It may take time, but you will start receiving offers for credit cards again. They'll just be from lenders that will charge a high interest rate. We advise our clients not to run up a lot of bills, but if you need to get an automobile, you should be able to secure the credit you need. Also, any card you have when you file for bankruptcy that has a zero balance can be left off the list of credit cards. This means that you may be able to keep that card.

  4. Married couples need to file jointly. This is not always true. It depends on the situation. It often happens that one spouse has debt in his or her name only. A couple may wish to file together, however, if they have debts that they are jointly liable for. In that situation, if only one spouse files, the creditor may go after the other spouse for the entire debt.

  5. It's difficult to file for Chapter 7 or 13. It is not difficult, but it is recommended that you hire a lawyer to make sure it's done right.

  6. You're a deadbeat if you file. Many people are forced into bankruptcy due to events outside of their control such as a medical issue or losing a job. Once you fall behind on payments, it can be hard to catch up and bankruptcy can help you get back on track.

  7. I should leave certain creditors off my bankruptcy filing so that I can pay them back in the future. It's a commendable sentiment. When you file for bankruptcy, it is important to include all creditors in your filing, regardless of your intentions to pay them back. While you will no longer be obligated to pay them back from a legal standpoint after your bankruptcy, you can certainly choose to repay them on your own.

  8. You can't discharge tax debt in bankruptcy. This is generally true, but there are exceptions. In limited circumstances, you may be able to discharge taxes that are more than three years old.

  9. You can only file for bankruptcy one time. This is not entirely true. Once every eight years, you can file for Chapter 7 bankruptcy. You can file for Chapter 13 bankruptcy more frequently, so long as cases do not overlap. Still, it's not good to make filing bankruptcy a habit.

  10. Right before filing for bankruptcy, I can max out my credit cards and not need to pay for anything I purchased. Bankruptcy courts take fraud seriously and it is not a good idea to go on a spending spree before filing. In bankruptcy, your purchases will be reviewed by a trustee.

  11. All of my friends and family will find out about my bankruptcy. Unless you're famous, it is highly unlikely that anyone will find out about your bankruptcy. While the records are public, they are not very easy to access for the general population and the media rarely reports on individual bankruptcy proceedings.

Contact us now for an assessment of your case. Let us help you get your life back on track, as soon as possible.