Bankruptcy Myths

There is a minimum amount of debt required to file bankruptcy.

Not so. There is no debt threshold you must meet in order to file bankruptcy. Bankruptcy is essentially a legal declaration that you are unable to pay your obligations. That determination varies from case to case.

You can’t keep your home or car if you file bankruptcy.

False. In fact, many individuals file for bankruptcy protection in order to save their homes from foreclosure or their vehicles from repossession.

Taxes cannot be discharged in bankruptcy

Incorrect. While it is true that taxes are difficult to discharge in bankruptcy, it is possible to discharge tax debt under certain circumstances. If you have tax debt, discuss your options for repayment and discharge with a seasoned bankruptcy attorney.

Medical bills can't be discharged in bankruptcy

Absolutely wrong. Medical bills are generally among the easiest type of debt to discharge in bankruptcy.

All of your debts are erased in bankruptcy

This is a dangerous myth. Not all debts are discharged in bankruptcy. Family support obligations and student loans are two examples of debts that are generally non-dischargeable (although certain exceptions exist). It is important to discuss all of your debts with your bankruptcy attorney to determine which debts can be discharged in your bankruptcy case.

You can’t get credit after a bankruptcy

No way! Debtors in bankruptcy are surprised to receive legitimate credit offers in the mail even before their bankruptcies are discharged. Rebuilding your credit after a bankruptcy is an important issue and should be discussed with your attorney.

You can choose who you file bankruptcy against

This is inaccurate. Federal bankruptcy law mandates that the debtor list all creditors on the bankruptcy schedules. There are several different ways that a debt may survive the bankruptcy (e.g. a non-dischargeable debt, or the debtor executing a reaffirmation agreement). Non-disclosure of a debt may prevent a discharge of your other debts and could land you in criminal trouble for bankruptcy fraud!

You can only file bankruptcy once.

Erroneous! Under the current bankruptcy laws an individual debtor can file a chapter 7 bankruptcy every eight years. An individual who has received a chapter 7 discharge may also receive a chapter 13 discharge after four years.