Myth #1: If I declare bankruptcy, they’ll take everything I own but the clothes on my back. The Straight Scoop – Most people do not lose their personal possessions through bankruptcy. Although it is true that you may be required to surrender your property there are provisions within the Bankruptcy Code called exemptions that were placed there to protect your property. Unless you own high value items with significant resale value over and above any debt you owe on them your personal possessions are probably protected.
Myth #2: People will think I’m a failure and a deadbeat – and they’ll be right. The Straight Scoop – You are not a failure and the world will not look down upon you for filing Bankruptcy.
Myth #3: I’ll never be able to get credit again. The Straight Scoop – You can qualify for credit again after filing bankruptcy.
Myth #4: I don’t owe enough to make filing for bankruptcy worthwhile. The Straight Scoop – You can file bankruptcy with very little debt.
Myth #5: My spouse’s credit will be ruined .
The Straight Scoop ‘ Usually you will NOT ruin the credit of a spouse who does not file.
You may well have separate lines of credit independent of your spouse. If this is true and your spouse is not legally responsible for your debts, you can file an individual bankruptcy and not include your spouse. This way you can discharge your debt and your spouse will KEEP his or her good credit. Each situation is different, so it is a good idea to discuss obligations that might include your spouse with your bankruptcy attorney early in the process.
Myth #6: The New Bankruptcy Law makes it impossible to file for Chapter 7. The Straight Scoop – You can still file a Chapter 7 bankruptcy!
Myth #7: Bankruptcy is against my religion. The Straight Scoop ‘ The Bible, the Koran, and other major religious traditions all maintain forgiveness of debt as a moral duty of believers. The Bible says this about debt at Deuteronomy 15:1-2: At the end of every seven-year period you shall have a relaxation of debts, which shall be observed as follows. Every creditor shall relax his claim on what he has loaned his neighbor; he must not press his neighbor, his kinsman, because a relaxation in honor of the LORD has been proclaimed. Throughout the Bible you will find many references to debts, usury (interest) and compassion for the poor. If you want to see additional quotes, discussion and links pertaining to debt and usury in other religions, go to my Debt and the World’s Religions page.
Myth #8: The Bankruptcy judge can take my retirement savings to pay creditors. The Straight Scoop ‘ Qualified retirement plans are exempt in bankruptcy.
Myth #9: You can’t file for Chapter 7 bankruptcy if you’ve been bankrupt before. The Straight Scoop ‘ You can, depending on circumstances. Chapter 13 is another option.
Myth #10: Everyone will know I’m bankrupt, and it will hurt my standing in the community. The Straight Scoop – Even though bankruptcy is public record very few people will know that you filed, unless you choose to tell them. Some local papers print the bankruptcy filings in the public notice section. Many newspapers only list a bankruptcy filing if a business name is involved or the individual filing bankruptcy is particularly well known in the area. If you live in a small town your neighbors might find out, if you have the sort of nosy neighbors who read legal notices and vital statistics, and then convert the information into gossip.