Bankruptcy Myths

Bankruptcy Myth 1: Filing for Bankruptcy Will Ruin My Credit

This is not true. If you already have a low credit score, filing for bankruptcy often will result in your credit score to go up. Also, most people find that their credit is reasonably well restored within two or three years.

Bankruptcy Myth 2: I Cannot File Because I Am Current on My Bills

False. Even if you are current on your bills, you will still be able to file as long as you meet the income and other eligibility requirements of Chapter 7 bankruptcy.

Bankruptcy Myth 3: I Cannot File Because I Owe Federal Taxes

False. In fact bankruptcy actually eliminates certain federal taxes.

Bankruptcy Myth 4: My Bad Credit Will Harm My Spouse's Credit Score

Not true. You and your spouse have separate credit records, and if you file for bankruptcy while your spouse does not, it will not affect your spouse’s credit as long as your spouse does not owe the same debts on which you are filing bankruptcy.

Bankruptcy Myth 5: Filing for Bankruptcy Will Cause Me to Lose My Home and My Car

False. Generally speaking, if you meet the income and asset limits to qualify for Chapter 7 bankruptcy, your house and car are exempt from the bankruptcy estate. This means they cannot be taken away from you to pay off your debts.

Bankruptcy Myth 6: I Heard the Law Changed and I Won't Qualify Anymore

Probably not true. Most people, unless they have very high-income jobs, will qualify for Chapter 7.