Debunking the Top 8 Bankruptcy Myths

The Law Offices of Damian M. Nolan can help you with your
Chapter 7 bankruptcy questions and concerns.
Call (562) 634-1115 for a free, no-obligation consultation today,
and get advice from the best!

Myth #1: Bankruptcy is no longer available for most people.

Answer:  Though the 2005 Bankruptcy Amendments have made the process of filing and getting a bankruptcy more complicated, bankruptcy protection is still available to almost everyone.

Myth #2: If you file for bankruptcy, the government will seize everything you own.

Answer: Since most bankruptcy cases are considered “no asset” cases – meaning that everything the bankruptcy petitioner owns is exempt from seizure and sale – it’s absolutely untrue that your property will be seized. In fact, some pensions and other assets are not considered part of the bankruptcy estate.

Myth #3: Married couples must file for bankruptcy protection together.

Answer: Though married couples can file for bankruptcy together, they are not required to.

Myth #4: If you have a job, you cannot file for bankruptcy protection.

Answer: The 2005 Amendments to the bankruptcy code instituted a “means test” which may prohibit some filers with steady income from filing for bankruptcy under Chapter 7, but this does not mean every person with a job cannot file for bankruptcy. An experienced bankruptcy lawyer can help you find out if you will be eligible under the means test to file for bankruptcy.

Myth #5: Your credit will be ruined for 10 years if you file for bankruptcy.

Answer: Although a bankruptcy remains on your credit report for 10 years, recent bankruptcy petitioners are regularly deluged with offers for credit. These offers generally have low limits and high interest rates, credit agencies often target recent filers because they cannot file for bankruptcy again for several years.

Myth #6: Medical bills cannot be discharged in bankruptcy.

Answer: Although collection agencies like to tell this story to those who owe medical debt, the truth is that, if the medical bills are unsecured debt (which most are), you can be almost certain that the medical debt will be discharged in bankruptcy.

Myth #7: Your debt has to be of a certain amount before you can file for bankruptcy.

Answer: Bankruptcy laws have no set minimum of debt required before filing. It’s really as simple as this: if you can’t pay what you owe, bankruptcy may be a viable solution for your situation.

Myth #8: Society will consider you a failure if you file for bankruptcy.

Answer: Whether a person is considering bankruptcy or not, the vast majority of people want to pay back what they owe. When debt is overwhelming and situations such as job loss, illnesses, death of a spouse, or other circumstances prevent a person from living a normal life and paying back the debt, sometimes bankruptcy is the best course of action.