Last week, we began a discussion of common bankruptcy myths that are prevalent among potential bankruptcy filers in Atlanta and throughout the U.S. Unfortunately, these myths often obscure the true purpose and effect of a personal bankruptcy filing, which is to help people get out of debt and get a fresh financial start. Hopefully, with greater awareness of the bankruptcy process, fewer people will be too intimidated to file.
Below, we will continue to debunk common bankruptcy myths.
- Myth: If I file Chapter 7 bankruptcy, all of my debts will be wiped out. There are certain types of debt, such as student loans, child support and alimony and (in most cases) tax debt that cannot be discharged in bankruptcy.
- Myth: If I file bankruptcy, I will lose everything I own. This is a big one. People often put off filing for bankruptcy over fear that they will be forced to give up all of their belongings. However, most state bankruptcy laws contain exemptions that protect certain assets, such as your home, retirement accounts, your car (up to a certain amount), clothing and household goods. If you have a mortgage or car loan, you will most likely be able to keep your home or car as long as you are making regular payments.
- Myth: All of my friends will know that I've filed for bankruptcy. In most cases, the only people who know about a bankruptcy filing is the filer, his or her bankruptcy lawyer and creditors and the court. Bankruptcy cases are public legal proceedings, but very few newspapers actually publish the names of people who file, especially in larger metropolitan areas.
If you have any additional questions about possible bankruptcy myths, it may be a good idea to contact an experienced bankruptcy attorney.
Source: MSN Money, "12 myths about bankruptcy"