5 Myths About Bankruptcy and its Consequences

Bankruptcy? Yikes! Doesn’t that carry a stigma??

It used to be that bankruptcy carried with it a heavy stigma, forcing people with financial troubles to avoid their problems altogether. Doing this inevitably leads to deeper debt, more stress and often losing assets that they could have kept had they filed bankruptcy! In today’s questionable and constantly changing economy, more individuals are beginning to see that bankruptcy is much more common and practical solution to financial issues.

In this post, let’s explore the major myths about bankruptcy so you can rest easier.

The 5 Major Myths About Bankruptcy

myths about bankruptcy

Myth #1: If I file for bankruptcy I’ll lose my house and all of my possessions! NOT TRUE!

Many rumors swirl about what you can and can’t have when you file. The laws are likely much more favorable than you might think. Contact us at the Berkowitz & Myer and we will be happy to explain how the exemptions will apply to you.

Myth #2: The Court only lets me have one car and I have two! NOT TRUE!

I am not quite certain how this rumor started but we’ve been hearing it for years. The issue is the equity in your vehicle(s), not the number you have.

Myth #3: I’ll lose my job and/or never be able to get another one! NOT TRUE!

Unless you have special governmental clearance or a career and special licensure in finance, it is rare for bankruptcy to affect employment. Remember, filing bankruptcy is a federal right. Speak to us if you have concerns about your job but it is extremely rare for a filing to impact you this way.

Myth #4: My credit will be ruined! (Usually) NOT TRUE!.

Most people who are in a financial bind have suffered a blow to their credit already. Others are on the verge of being turned over to collections and/or facing lawsuits. Many times people with stellar credit should file bankruptcy as they simply cannot afford to pay their debt. While bankruptcy does adversely affect your credit, you can START OVER. Most clients can re-build good credit after the bankruptcy discharge that they never could have realized without filing. USUALLY, BANKRUPTCY IS THE ONLY WAY FOR PEOPLE SUFFERING WITH CRIPPLING DEBT TO ONE DAY HAVE GOOD CREDIT AGAIN!

Myth #5: I’ll have to re-pay all of my debt OR I can’t just get rid of all of my debt: NOT TRUE!

There are different types of bankruptcies for consumers. If you can afford to repay a portion of your debt, you will in Chapter 13. If your income does not support loan repayment you may qualify to discharge your debt entirely. Be certain to speak with an experienced bankruptcy lawyer to determine what your options are. In most circumstances, the people who feel bad about discharging all of their debt have no way to repay it. Bankruptcy gives them the fresh start they need.

Don’t let myths, rumors or wrong advice from non-lawyers get in the way of finding out your rights under the law. Contact us at Berkowitz & Myer for a free consultation and be informed!

Attorneys are one of those things in life you hope you never need, but when you do you should make sure you select the right one and Berkowitz & Myer is the right one.


Jesse, Christian and Jon are fighters and they care & go the extra mile for their clients.