7 More Myths About Filing for Bankruptcy
In a previous article, we discussed three of the most common myths about filing for bankruptcy. We covered the common misconception that you will lose everything if you file for bankruptcy (you won’t), the mistaken belief that filing for bankruptcy means that you won’t be able to own anything again (you will), and the incorrect assumption that filing for bankruptcy is the worst thing you can do for your credit (it isn’t).
Unfortunately, these aren’t the only myths that are out there. From bad information online to bad advice from people who made mistakes during the bankruptcy process, myths about filing for bankruptcy persist for various reasons. With this in mind, here are seven more common myths about filing for bankruptcy—as well as the truth behind them:
Myth #1: Filing for Bankruptcy is Irresponsible
Many people think that filing for bankruptcy is irresponsible. If you have debt, you should pay it—and if you can’t afford to pay it, you should face the consequences. Responsible people won’t go too far into debt in the first place, and those who make mistakes shouldn’t “take advantage” of the system.
The Truth: Chapter 7 and Chapter 13 Exist for a Reason
Filing for bankruptcy is not irresponsible. In fact, it is quite the opposite. When you file for personal bankruptcy, you will typically submit your filing under either Chapter 7 or Chapter 13 of the U.S. Bankruptcy Code. These are federal laws that Congress enacted for a very specific purpose—to provide the opportunity for a fresh start to individuals who have accidentally taken on more debt than they can afford.
Myth #2: Everyone Will Know that You Filed for Bankruptcy
Since bankruptcy filings are public record, everyone will know that you filed for bankruptcy. Your friends, neighbors and family members will treat you differently, and your employer may even decide that keeping you onboard isn’t worth the risk.
The Truth: No One is Likely to Know About Your Bankruptcy Unless You Tell Them
While it is true that bankruptcy filings are generally public record, this doesn’t mean that everyone—or anyone—will know that you filed for bankruptcy. To find your bankruptcy filing, someone would have to go digging. As a result, while many people have concerns about their bankruptcy filings being made public, the reality is that no one is likely to know about your bankruptcy unless you tell them.
Myth #3: Creditors Can Get Around the Bankruptcy Process
While filing for bankruptcy invokes the automatic stay, creditors can still get around the bankruptcy process. You will still receive letters and phone calls, and you will still be at risk of facing repossession, foreclosure or both
The Truth: The Automatic Stay Provides Powerful Protection for Bankruptcy Filers
When you file for bankruptcy under Chapter 7 or Chapter 13, the automatic stay provides powerful protection. It takes effect immediately, and it prevents your creditors from pursuing collection action in any form while your bankruptcy case is pending. While there are exceptions that allow creditors to pursue collection in some circumstances, these exceptions are typically limited to situations involving fraud and other egregious forms of misconduct.
Myth #4: You and Your Spouse Will Both Need to File
In order to file for bankruptcy, your spouse must file for bankruptcy as well. You will both need to go through the process, all of your shared property will be on the table, and you will both face the long-term consequences of having a bankruptcy filing on your record.
The Truth: Many Spouses File for Bankruptcy On Their Own
While married spouses certainly can file for bankruptcy jointly, they are not required to do so. If you have debts that are yours—and yours alone—then filing for a solo bankruptcy may provide all of the financial relief you need. Debts such as credit card debt, car loans, boat loans and mortgages are commonly in one spouse’s name, and when this is the case, the indebted spouse can file for bankruptcy individually.
Myth #5: Filing for Bankruptcy is Too Expensive
With the filing fees and other costs involved, filing for bankruptcy is too expensive for most people. If you are already in debt, the last thing you want to do is spend your money on something that may or may not provide the financial relief you need.
The Truth: Filing for Bankruptcy Is Not Expensive in Comparison to the Costs of Keeping Your Unmanageable Debt
Yes, there are costs involved with filing for bankruptcy. You will need to pay a filing fee, and you may incur copying, printing and other costs during the process. However, these costs can pale in comparison to the costs of keeping your unmanageable debt.
Myth #6: Hiring a Bankruptcy Lawyer is Too Expensive
While it would be nice to hire a lawyer to handle your Chapter 7 or Chapter 13 bankruptcy for you, legal representation is simply too expensive. By the time you pay your legal fees, you might as well have paid what you could to your creditors instead.
The Truth: Hiring an Experienced Bankruptcy Lawyer Can Save You Money
Contrary to popular belief, hiring a bankruptcy lawyer is not expensive. In fact, working with an experienced lawyer can save you money in the long run. With an experienced lawyer on your side, you can maximize the financial benefits of going through the bankruptcy process.
Myth #7: Filing for Bankruptcy Isn’t Worth It
Given the costs, challenges and uncertainty involved, filing for bankruptcy isn’t worth it. You are better off dealing with your situation and letting your creditors try to chase payment.
The Truth: Filing for Bankruptcy is the Best Choice for Many Individuals and Couples
When filing for bankruptcy makes sense, going through the process is well worth it. Not only can it save you a substantial amount of money, but it can also save you from the stress and aggravation of dealing with your creditors on a daily basis. If you work with an experienced lawyer to successfully navigate the bankruptcy process, you will come out of the process with a new financial lease on life.
Request a Free Consultation with Personal Bankruptcy Lawyer Georgette Miller
Are you thinking about filing for a personal bankruptcy? If so, we invite you to contact us to learn more. Call 866-964-6529 or contact us online to schedule a free consultation with personal bankruptcy lawyer Georgette Miller.