I'll lose all of my property if I file for bankruptcy. This couldn’t be further from the truth. In Chapter 7 bankruptcy, the trustee may liquidate some of your assets, but filers are able to keep a significant amount of property under their state’s exemption laws. In Illinois, for example, filers can protect up to $15,000 worth of equity in their homes. In addition, cars, clothing, cash, work equipment, and other personal property may be covered by Illinois exemptions.
Everyone will know about my case. This is highly unlikely. Bankruptcy filings do become part of the public record, but it takes a lot of hunting to discover the information. And trustees only notify your creditors of the bankruptcy filing. The only time a trustee would notify your employer of a pending bankruptcy is if your wages are being garnished, which is relatively rare.
My credit will be permanently ruined. Again, not true! Bankruptcy filings typically remain on your credit report for 10 years (although Chapter 13 cases are often removed after 7 years), but most bankruptcy filers already have poor credit. By filing for debt relief, you’ll be able to free up funds to begin improving your credit score. It takes a bit of time, but bankruptcy may let you significantly improve their credit score over the long run.
Bankruptcy lasts forever. Most filers find that Chapter 7 bankruptcy only takes a few months. Granted, Chapter 13 bankruptcy lasts for three to five years, but filers work to pay off their debts during this process, while living perfectly normal lives.
If I file, my spouse will have file, too. In many cases, this is not true. In fact, it’s common to see one spouse file for bankruptcy, while the other stays out of the case. If your debts only belong to you, you may be able to file bankruptcy without bringing your spouse along.
Bankruptcy is only for people with low incomes. Not true at all. People from every part of the social strata file for bankruptcy, including bankers, teachers, and executives. Debt can strike anyone, at any time.