There are a number of misconceptions about the rights of individuals to file bankruptcy and the consequences of filing. The following is a list of the most common myths:
It is no longer beneficial to file bankruptcy under the new laws.
- This misconception is the result of news media frenzy. The truth is, you can do almost everything under the new law that was available under the old law. In fact, in some ways, the new law increases the benefit of filing bankruptcy.
Everyone will know you have filed for bankruptcy.
- Your bankruptcy is a matter of public record. However, unless you're famous, chances are good that only you and your creditors will know.
You will lose everything you have.
- Most clients do not lose anything! Every state has laws that exempt certain assets from a bankruptcy creditor. Fortunately, for us Florida residents, our exemption laws are among the most debtor friendly laws in the nation. Further, Chapter 13 enables you to retain property that is not protected by the state's exemption laws.
You will never be able to own anything again.
- Once you get your "discharge in bankruptcy"; you can buy and own whatever you can want.
You will never be able to get credit again.
- Actually, the opposite is much closer to the truth. If you're considering bankruptcy, most likely you're credit is already messed up, maxed out or both. At this point, you don't have any credit for bankruptcy to hurt. Filing bankruptcy reduces your debt thus making you more attractive to lenders as you in a better position to handle credit in the future. Initially lenders will require more money down and charge higher interest rates. However, if you pay your bills on time, you will generally be able to re-establish your credit over 2 to 4 years.
Filing Bankruptcy makes you a bad person / only deadbeats file bankruptcy.
- Filing bankruptcy is often the responsible thing to do. Everyone wants to be able to pay their bills. However, everyone needs to take care of their family and provide for their well being. The bankruptcy laws were created to give families a way to escape the crushing burden of debt, giving them a fresh start and enabling them to provide for their family.
If you're married, both you and your spouse must file for bankruptcy.
- In circumstances when husband and wife have a lot of debt, filing jointly makes sense and saves money. However, this is not a requirement and there are many situations where this is no good reason to have the second spouse file.
Bankruptcy is a difficult process.
- The decision to speak with a bankruptcy attorney and understand your options is what's difficult. The filing is the easy part.
Creditors will continue to harass you after bankruptcy.
- When your bankruptcy is filed, the Bankruptcy Court issues an order telling all of your creditors to leave you alone ("automatic stay"). This prohibits the creditors to stop all collection efforts and cease contact. If a creditor violates the automatic stay, you have the right to bring action against the creditor.