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Seven Common Bankruptcy Myths

The word bankruptcy can cause many of us strong anxiety. Our minds conjure up all sorts of negative “facts” and “truths” about what filing for bankruptcy means and how it will affect our lives and the lives of our loved ones. Fortunately, much of what we think we know about bankruptcy law and the process of filing for bankruptcy are overblown myths and misrepresentations.

Below, we address and correct many of the most common bankruptcy myths. Please contact us for more information about the myths below or for any other questions you may have.

Myth #1: Only people who are financially irresponsible file for bankruptcy.

Of course there are always people out there who have acted totally irresponsibly when it comes to their finances and use bankruptcy as a short-term solution to a much deeper problem. But the vast majority of people who file for bankruptcy are financially sound individuals who have had an unavoidable event occur in their lives that was completely out of their control. Most people file for bankruptcy after having lost their job, suffering a major medical problem or illness, and lastly, after filing for divorce. None of these things are your fault nor do they point to any financial irresponsibility on your part. Bankruptcy helps a good person out of a bad situation.

Myth #2: I will lose everything I have worked so hard to own.

Understandably, many people are concerned that filing for bankruptcy means that they will lose all their assets. In most cases, you will be able to retain ownership of your home, car, personal household goods and even your pension. Both Chapter 7 and 13 bankruptcy filings have exemption and stay procedures that can protect your assets from creditors while you go through the bankruptcy process.

Myth #3: Filing for bankruptcy will permanently ruin my credit.

Filing for bankruptcy can be one of the best things you ever do for your credit. Old, large debts simply drag your credit rating down. Bankruptcy allows you to begin the process of rebuilding your credit score while responsibility paying the debts you to owe over time. Many debtors find they receive new credit card applications in the mail fairly soon after filing for bankruptcy. By paying these new credit card bills on time, your credit score will improve even more quickly.

Myth #4: Bankruptcy will discharge all my past debts.

Bankruptcy can provide you with a fresh start in many areas of your life, financial and otherwise. However, there are some types of debt that not even bankruptcy can discharge and for which you will still be obligated to pay after your bankruptcy. If you are legally responsible to pay alimony or child support payments, these responsibilities remain after filing for bankruptcy. If you have been ordered to pay criminal restitution because of a crime, that obligation will also remain. Further, bankruptcy will not discharge student loan debt or tax debts especially if you did not file a tax return.

Myth #5: Similar to filing your taxes, when you are married, you must file for bankruptcy jointly as husband and wife.

Although you may be married, you and your spouse do not have to file for bankruptcy jointly. One spouse may file for bankruptcy without having to involve their spouse in the filing. However, this is only true in the case of individual debt. Debt that is held jointly may be a more complicated scenario for which you should consult with a qualified bankruptcy attorney.

Myth #6: It is very difficult to file for bankruptcy.

The process of filing for bankruptcy is not difficult and relatively standard in most cases. However, you will need to retain qualified representation to help guide you through the process and to make sure no step is skipped and no paperwork left unfiled.

Myth #7: Bankruptcy is a cure-all.

There are many advantages to filing for bankruptcy. Filing for bankruptcy allows you to press a restart button on your financial future. But make no mistake; if you do not take advantage of the second chance to clear your credit and conscientiously pay what you owe, your return to bankruptcy court could be imminent.


"Melanie is the best she very responsive and helpful throughout the process everything was taken care of smoothly. If you are thinking of going through bankruptcy she is the best attorney for you. I will forever be grateful having the chance to work with her. She is very honest too."


"I can't thank Melanie enough for helping me through a challenging process and doing so with incredible knowledge, professionalism and tenacity! She went to great lengths to keep me informed, she responded quickly to my questions, and communicated in terms that I could understand. I highly recommend getting in touch with Melanie should you have the need."


"Choosing to work with Atty. Melanie has been one of the best decisions I've ever made. She was a very patient professional to work with and attentive while providing valuable solutions to all of my concerns. If you are searching for of an Attorney who is knowledgeable, transparent, and diligent - well that's Atty. Melanie."


"What I liked about working with Melanie was how prompt and easy to work with she was. She made the process clear and understandable with as little stress as possible. I would work with her again and recommend her to others."