Debunking 10 Bankruptcy Myths: What Creditors Don’t Want You to Know

Bankruptcy can seem scary because of many myths and misunderstandings that stop people from thinking about it as a real way to get out of debt. Creditors like to keep these myths alive so that people don’t try to get bankruptcy protection. To make the best choice for you and your family, it’s important to know what’s true and what’s not. Here are ten myths about bankruptcy that creditors don’t want you to know are false:

 

Myth: Everyone will know if I file bankruptcy.

Reality: It is highly unlikely anyone will find out you filed bankruptcy unless you tell them. While bankruptcy cases are technically public record, they won’t show up in a Google search. Anyone looking for information would have to pay for an account on a government site.

 

Myth: Bankruptcy ruins your credit forever.

Reality: While bankruptcy does impact your credit score initially, it allows you to erase your debt and rebuild your credit. Our clients see dramatic improvements to their credit scores, often within days of filing.

 

Myth: You’ll lose everything you own in bankruptcy.

Reality: Bankruptcy laws provide exemptions that protect certain assets, allowing individuals to retain essentials like their home, car, and personal belongings.

 

Myth: Filing for bankruptcy means you’re financially irresponsible.

Reality: Bankruptcy is often caused by unforeseen circumstances such as medical bills, job loss, or divorce, rather than financial irresponsibility.

 

Myth: Bankruptcy is only for the unemployed or low-income individuals.

Reality: People from all income levels file for bankruptcy when they’re unable to manage their debts. In fact, bankruptcy is a tool that many corporations and high-income individuals use strategically to protect their financial interests.

 

Myth: You can’t discharge tax debts in bankruptcy.

Reality: While not all tax debts are dischargeable, certain types of tax debts can be eliminated through bankruptcy under specific conditions. As a firm that specializes in debt and bankruptcy, we have a proven track record of successfully eliminating tax debts.

 

Myth: You’ll never be able to get credit again after bankruptcy.

Reality: Many individuals obtain credit after bankruptcy. In fact, many of our clients receive credit card offers in the mail the day after filing!

 

Myth: Bankruptcy wipes out all types of debts.

Reality: Certain debts, such as domestic support payments and criminal fines, are typically not dischargeable in bankruptcy.

 

Myth: You can’t discharge student loan debts through bankruptcy.

Reality: While student loans are typically not dischargeable in a bankruptcy, recent government regulations have opened the door to eliminating student loans through adversary cases filed after a bankruptcy. Henkels & Baker, P.C., has successfully eliminated over $80,000 in student loan debt by pursuing these cases. (This opportunity may change with the November election, so contact us immediately to learn if you are a candidate for a student loan adversary case!)

 

Myth: You’ll lose your job if you file for bankruptcy.

Reality: Federal law prohibits employers from terminating employees solely based on bankruptcy filing.

 

Fact: If you are relying on Google to learn about bankruptcy, keep in mind that much of what you will read is propaganda from credit card companies and other institutions that benefit from you staying in debt. Seeking guidance from a qualified bankruptcy attorney is crucial to navigating the process successfully and achieving a fresh financial start. Don’t let misconceptions prevent you from exploring a potential solution to overwhelming debt. Contact us today for a free debt consultation.