Bankruptcy Myths

Revealing the truth behind the top five bankruptcy myths

Rooted in half-truths and misunderstandings, myths abound about those who file for bankruptcy and the bankruptcy process. In the interest of setting the record straight, here is the truth behind the top five bankruptcy myths.

Myth #1: If you file for bankruptcy, you must be financially irresponsible.

While it may be true that some who file for bankruptcy are financially irresponsible, most people aren’t. In fact, they have struggled for months or even years to pay their debts, but mounting debts have accrued for external reasons, such as involuntary loss of employment, illness of the wage earner, medical expenses of family members, and divorce. The present economy is also a factor.

Myth #2: All debts are wiped out in bankruptcy.

While most debts are discharged, some debts are not wiped out in bankruptcy, such as:

  • Child support arrears
  • Alimony arrears
  • Income tax due within the past three years
  • Other taxes such as payroll taxes
  • Student loans
  • Restitution for criminal acts or fraud

Myth #3: It will take at least seven years for you to get credit again.

Very soon after receiving your bankruptcy discharge, you will likely begin receiving offers for credit cards. Beware, as the interest rates will likely be very high. A better way to rebuild your credit rating is to obtain a secured credit card and demonstrate that you can make regular and timely payments. Another way is to get a car loan from a dealership, which is more likely than getting a bank to give you a car loan because it helps sell one of their cars.

Myth #4: I will lose everything I own.

Much if not most of an individual debtor’s assets are or can be declared to be exempt assets, thus enabling the debtor to keep those assets.

Myth #5: I can max out my credit cards just before filing for bankruptcy and get away with not having to pay the credit card bills.

That would be fraud and you cannot discharge fraud in bankruptcy.

Let an experienced NY bankruptcy attorney help you file for bankruptcy

If you live in New York City and think bankruptcy may be a viable option for you, contact The Law Office of Gregory Messer online or at 718-717-2368 to schedule a free initial consultation. Our office is located across the street from the U.S. District Bankruptcy Court in Brooklyn and is close to the Borough Hall and Court Street subway stations. We serve residents throughout Brooklyn, Bronx, Manhattan, Staten Island and Long Island.

To ensure every client’s filing receives the attention it deserves, we are an appointment-only law firm with flexible hours adjustable to fit your needs.

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