As a bankruptcy attorney with nearly 20 years of experience, I regularly meet with individuals contemplating bankruptcy who are hesitant to file for fear that their credit score will never recover.  The good news is that this couldn’t be farther from the truth.  Unfortunately, bankruptcy myths often prevent individuals and businesses alike from filing for bankruptcy when they could truly benefit from doing so.   Accordingly, I have compiled the following list of the most common myths associated with filing for bankruptcy so that you can determine whether such an action is right for you.

  • Once I file for bankruptcy, I will lose all of my belongings.  This is not the case.  There are many ways in which people can preserve their property when filing for bankruptcy.  Under the federal Bankruptcy Code, there are several exemptions that allow people to keep the majority of their property.
  • My credit will be destroyed if I file for bankruptcy.  This also is untrue.  Once your debt is discharged, your credit accounts are deleted from your credit report and your balance returns to zero.  This undoubtedly makes you more attractive to creditors since this automatically reduces your debt to income ratio.  With a lower debt to income ratio, you will likely be able to qualify for certain forms of credit. 
  • Given the changes in the bankruptcy laws, I won’t be eligible to file.   Definitely not true.  Bankruptcy still remains a distinct possibility for those facing serious financial hardship.  While it can be more challenging for some people with sufficient incomes to qualify for bankruptcy, plenty of others will still meet the eligibility criteria.
  • I will never be able to get a credit card or take out a loan.   Not true.  Credit card companies often solicit people who file for bankruptcy.  Specifically, banks and credit card companies offer various credit options for those who discharged debt through a bankruptcy.
  • I won’t be able to discharge my tax debt if I file for bankruptcy.    False.  Although it can be difficult to discharge certain tax debt, it is not impossible.  Certain tax burdens can in fact be discharged in bankruptcy along with various other forms of debt.
  • I will never be able to qualify for a mortgage.  Not true.  While mortgage companies may require you to wait for a certain period of time before applying for a loan, it typically is not for very long.  For example, many people within a year after filing for bankruptcy are able to qualify for a mortgage.

Providing Quality Bankruptcy Representation for Nearly 20 Years

To learn more about your bankruptcy options, contact my office today for a free consultation.  I will take the time necessary to answer your questions and educate you as to the different bankruptcy alternatives available to address your financial situation.