5 Common Misconceptions About Filing Bankruptcy

1. If I file for Bankruptcy I will lose all of my property.

This may be the biggest misconception surrounding filing
for bankruptcy.  Every person who files for bankruptcy can
protect a certain amount of property while still
eliminating all or a portion of their debt.  Depending upon
the state in which the person lives, there are state and/or
federal exemption laws that permit a person to shield a
certain value in property.  In most Chapter 7 bankruptcy
cases, people keep all of their property.  They can even
keep their homes and cars provided that they continue to
make timely payments on those items.

2. If I file for Bankruptcy Everyone Will Know About It.

Unless you're a celebrity, the fact that you filed for
bankruptcy will not become  generally known.  A person
would have to know exactly where to look to see if your
name was among the recent filings.  You can even prevent
your current employer from learning about your filing.  An
exception to that would be if bankruptcy papers needed to
be sent to stop a garnishment.

3. If I file for Bankruptcy I Will Never Get Credit Again.

This is simply not true.  In fact, many lenders
aggressively target those that have recently filed.
Although the interest rate may be higher than normal, the
opportunity for credit still exists.  If a person can wait
two years before seeking credit after a bankruptcy, he will
see an interest rate much closer to that of a non-filer.
With regard to autos, it's relatively easy to obtain
financing after a bankruptcy.  In fact, some lenders will
even provide financing before the current bankruptcy case
has ended.  In any case, the evidence of bankruptcy filing
will be removed from a credit report after 10 years.

4. If I file for Bankruptcy All of My Debts Will Be Wiped
Out.

This all depends upon the type of debt that a person has.
In some cases, there are debts that are not eliminated.
These may include student loans, recent taxes, child
support, maintenance, parking tickets and debts incurred
through fraud.  Consult with an experienced bankruptcy
attorney to discuss the particular debts that you have and
the likelihood that they will be eliminated.

5. If I file for Bankruptcy I Can Choose Which Creditors to
List.

All of your creditors must be listed on your bankruptcy
petition.  Although you can voluntarily pay back any
creditor you desire, you cannot omit that creditor from
your list of creditors.  Clients often like to keep a
credit card free and clear from their bankruptcy filing.
They think that by not listing the particular creditor,
they will be able to keep the credit card and continue to
use the charging privileges.  This is simply not the case.
Many credit card issuers subscribe to a service that
notifies them of newly filed bankruptcy cases.  Don't plan
on keeping a credit card after your bankruptcy filing.


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David M. Siegel is the author of Chapter 7 Success: The
Complete Guide to Surviving Personal Bankruptcy.  He is a
member of the American Bankruptcy Institute and currently
practices bankruptcy law in Chicago and its surrounding
suburbs.  Additional information is available at
http://www.bankruptcy-lawyers-chicago.com .