Navigating the world of bankruptcy can be difficult and there is a lot of misinformation out there. Let’s debunk some of the most common bankruptcy myths.
Myth: I’ll Lose All My Property
Truth: It depends on what type of bankruptcy you file, but most people won’t have to give up their personal and/or real property. Each state has their own exemptions, or uses those in federal bankruptcy laws, to try and help filers keep their property.
Myth: I’ll Never Qualify for a Line of Credit Again
Truth: Many people think they’ll never be able to qualify for a mortgage, car loan, credit card, etc. But the truth is, there are certain creditors who will want to extend you a line of credit. They know that you won’t be able to file bankruptcy again for a number of years, so their chances of losing money on you is very slim.
Myth: It’ll Affect My Spouse
Truth: This will depend on whether you and your spouse hold any joint debt. If one spouse files bankruptcy without the other, only the filing spouse’s individually held debts are eligible for discharge or a payment plan. Both spouses will still owe on any jointly held debts.
Myth: My Family/Friends/Employer Will Find Out
Truth: This is a big fear for a lot of people. There is an outdated social stigma around filing bankruptcy. However, bankruptcy is more common than most people realize, one in ten adults will file at some point in their life. Also, while bankruptcy cases are public records, most everyday cases aren’t newsworthy and therefore aren’t public knowledge. Someone would have to go on a deep dive to intentionally find out about your bankruptcy.
If your bankruptcy plan requires garnishment of your wages, then your employer will be notified. However, that doesn’t necessarily mean your coworkers will be aware.
Myth: I Won’t Be Able To Get A Job
Truth: Employers are not allowed to discriminate against you because you have filed for bankruptcy. However, depending on the type of job you apply for, it can certainly influence their hiring practices. The best advice is to be honest with potential employers. People often file for bankruptcy because a major life event has disrupted their finances, and that is very relatable. Reassure your potential employer that it does not reflect your work ethic or ability to perform work related responsibilities.
Myth: I Can’t Afford A Lawyer
Truth: Courts often limit the fees an attorney can charge, and most state statutes will set the filing costs. An experienced attorney will let you know what these costs are and work with you to determine if bankruptcy makes sense to you.
Hiring a lawyer to assist you is one of the most important steps in successfully filing bankruptcy and avoiding legal consequences. If you are thinking of filing for bankruptcy, call a bankruptcy lawyer for a consultation.