5 bankruptcy myths you need to know

You’re thinking about filing for bankruptcy, something you’ve never done before. At this point, you’re just trying to gather information and learn as much as you can about the process. Below are a few common myths that you need to be aware of.

1. The whole world will know.

Technically, a bankruptcy filing is public information. However, there are thousands of filings every month in New York. Most never get anywhere near the news.

2. You’ll lose everything to liquidation.

Chapter 7 frightens some people because they assume everything will be sold. In reality, you get a lot of exemptions for assets you really need.

3. All of your debt will be gone.

This can be true, depending on exactly what debt you have. However, some debts can’t be discharged, like child support and, in most cases, student loans.

4. Married couples have to file together.

While you may both file if you have shared debt and both need assistance, you don’t necessarily have to do so. One spouse could file for bankruptcy while the other refrains, potentially preventing the hit to that spouse’s credit rating.

5. You can’t get credit cards after bankruptcy.

You can. It’s just harder to get any card you want. You may have to settle for a secured line of credit, a prepaid card, a card with a high interest rate, or something of this nature. Cards are actually a big part of rebuilding credit.

There are many myths about bankruptcy, and these are just a few examples. They help show why it’s never wise to assume anything and it’s crucial to look into your real legal rights and options.

Source: Bankrate, “12 myths about bankruptcy,” accessed Feb. 24, 2017