Common misconceptions about bankruptcy
The following are common myths and misconceptions we frequently hear from clients.
- You’ll never get credit again- While the past credit history is taken into account when a consumer is seeking new credit, the recent credit history often counts more than the past. A bankruptcy does not always disqualify an individual from being able to secure credit in the future.
- You can pick and choose which debts to include in a bankruptcy- All debts must be listed by the consumer in a bankruptcy case. If a debtor fails to include all information, the bankruptcy case is at risk of dismissal. It is crucial to make a comprehensive list of all debts when preparing to file bankruptcy. It is recommended that you review your recent credit report as well so that you don't overlook any creditors when preparing your paperwork.
- Late payments are just as bad as filing for bankruptcy- It is true that late payments and a bankruptcy can harm your credit. However, maintaining bad debts on your credit report over time will lower your credit score also. Bankruptcy lets you start clean so you can rebuild your score over time.
- People who have a job can’t file for bankruptcy- This statement is untrue. However, all bankruptcy filers must pass a means test to determine if they are eligible to file for bankruptcy as well as which form of bankruptcy (Chapter 7 or Chapter 13) they are eligible to file for.
- Married couples need to file jointly- Though many do wish to file together, this is not always the case. When one spouse has debt in his or her name only, they can choose to file on their own.
- My medical bills cannot be discharged- In most cases, all debts, including medical bills, can be discharged if a debtor's bankruptcy is approved. However, this does not include child support, alimony payments, and most student loans.
- If you file Chapter 13, you have to repay debts in full- The type of repayment plan that will be offered under a Chapter 13 filing will vary based upon each individual filer. The filer's income, total assets, exempt assets and total debts will be used to determine what the repayment plan will consist of.
- You will lose everything you own if you file bankruptcy- In most cases, individuals filing for bankruptcy do not have assets that qualify for liquidation under the code. There are exemptions offered that allow the filers to keep certain assets, such as retirement accounts, pensions, IRA's, vehicles and a primary residence.
- You have to have a minimum amount of debt to file bankruptcy- There is not a current required minimum quantity of debt in order to qualify for bankruptcy filing. If you are unable to repay your debts and have been unable to resolve issues with your creditors on your own, bankruptcy may be the most viable option.
- Creditors will still harass me after I file- Under bankruptcy law, creditors must cease calling and harassing you once you have filed for bankruptcy. If a creditor does not follow these rules, the debtor may have options to seek punitive damages against the creditor. Once you have filed for bankruptcy, your creditors should stop bothering you completely.
- Everyone will know I filed- Unless you are a prominent person within a major corporation, chances are that the only people that will know you filed for bankruptcy will be your creditors.
- You can only file for bankruptcy one time- This is not entirely true. However, it’s not good to make filing bankruptcy a habit. You can file for Chapter7 bankruptcy once every eight years. You can file for Chapter 13 bankruptcy more frequently, so long as cases do not overlap.
- It’s really complicated to file for bankruptcy- While there are certain legal formats and processes to become familiar with, a bankruptcy attorney will walk you through the process ensuring that you follow the requirements. An attorney will also be able to answer any specific questions about the bankruptcy process for you, making things as simple as possible.
Tailored legal advice
The team at Ribstein & Hogan Law Firm has been providing bankruptcy services for over 25 years and can guide you through the process. For your convenience, we are here to answer your questions and handle your case filing virtually – you will not have to leave the comfort of your home. To find out more and receive a free, no-obligation case evaluation with one of our experienced bankruptcy lawyers call (605) 692-1818 or fill out our contact form below.
We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.