Bankruptcy Myths: What You Should Know

Bankruptcy might be the most valuable tool you have at your disposal if you are struggling with money, but because there are so many bankruptcy myths out there, many debtors don’t bother filing. There are few areas of law around which there are more mistruths and because of this, many people never even consider whether or not bankruptcy could help them turn around their current financial situation.

What are some of the most common bankruptcy myths?

Everyone Will Know I’ve Filed for Bankruptcy!

For many, the prospect of bankruptcy is embarrassing, and as such, they dread the idea that loved ones and colleagues could find out they filed. Instead of taking control of debt, they sneak around, avoiding calls from creditors and hoping their financial problems don’t catch up with them.

Unfortunately, running from the problem creates larger problems and before too long, embarrassment becomes the least of anyone’s worries. All because they mistakenly believed their bankruptcy would be public knowledge.

The truth is when you file for Chapter 7 bankruptcy, your employer is not notified. In Chapter 13 cases, when wage garnishment is involved, your employer will know. However, you immediate co-workers might not be aware as it is typically the payroll department and/or human resources that handle paychecks and wage garnishment issues.

Your bankruptcy is also not “announced” to the general public. Very rarely are bankruptcies published in newspapers, even when you live in a small town where there is very little going on. Chances are the only people who will know you filed for bankruptcy are the people you choose to tell.

I’m Not Poor Enough to File for Bankruptcy!

Though it might seem as if bankruptcy is for “poor people,” the truth is it is a tool used by people of all financial means to organize and repair their situation. As a matter of fact, changes made to the US Bankruptcy Code in 2005 made it more expensive to file for bankruptcy, so it is not an option for as many people as you might think. Definitions of “poor” vary, but in order to file, you must be able to pay the fees associated with the process.

According to a 2012 investigation by CNN, the average cost of bankruptcy in America is $1500. Read more about the cost of filing here.

My Credit Score – It Will Never Recover!

Your credit will take a hit from bankruptcy, but rarely is that hit any worse than juggling mountains of debt for months or years. Most people resort to bankruptcy to protect their credit score. Despite the immediate effects of filing, long-term your credit will begin to improve. It will take some work and discipline on your part, but filing for bankruptcy is often the first step toward repairing credit.

Filing for bankruptcy is more complicated than ever and trying to do it on your own can leave you drowning in frustration – or worse, lead to a rejected bankruptcy. This is one of the reasons it is so important to work with a bankruptcy expert who can dispel for you many of the myths related to bankruptcy, help you determine if filing is right for you, and if it is, help you complete the application process and ensure all goes as planned.

If you have questions about bankruptcy or you are ready to take the first step toward a brighter financial future, contact the Law Offices of Robert M. Geller at 813.254.5696 to discuss your situation.