Bankruptcy Myths – Lies your creditors want you to believe.

• Filing Bankruptcy hurts your credit for 10 years 
• You are a bad person for filing bankruptcy 
• You will lose everything you own if you file bankruptcy  
• You will never get credit again after filing bankruptcy  
• You will never be able to own property again 
• You can pick and choose what creditors to put into your bankruptcy 
• Both you and your spouse have to file bankruptcy together 
• It is hard to file bankruptcy  
• You can't get rid of back taxes in bankruptcy  
• You can only file bankruptcy once  
• Creditors will still harass you after you file bankruptcy  

Filing Bankruptcy hurts your credit for 10 years  

NOT TRUE.  Bankruptcy will stay on your credit for 10 years, but that does not necessarily mean that it will have a negative effect on your credit.  For most people contemplating bankruptcy, their credit is already maxed out, ruined, or both.  For these people, filing bankruptcy actually helps STOP their bad credit by getting rid of their debt.  After the bankruptcy discharge, you'll have a much better debt to income ratio and be a better credit risk.  You'll also be in a much better position to start re-establishing your credit.

You are a bad person for filing bankruptcy

NOT TRUE.  Almost one million people file bankruptcy this past year, and with the current economic crisis bankruptcies are only on the rise.  Most of these filers are good people who realize they have a duty and responsibility to put their families first.  Most people use bankruptcy as a last resort, after months and sometimes years of struggling trying to pay their bills.  Filing bankruptcy helps these good people take a positive direction in their life, by getting their debt under control and focus on their family's future, well-being, and prosperity.

You will lose everything you own if you file bankruptcy

NOT TRUE.  Most bankruptcy filers lose nothing.  In a chapter 7 bankruptcy, you're only required to liquidate whatever property you own that is not exempt under either Florida or Federal law.  For most families eligible to file under chapter 7 they're able to exempt all their property and keep everything they own.  Another option is a Chapter 13 filing, which is a debt reorganization.  Under a chapter 13 you're only required to pay your creditors whatever disposable income you have and in the process you get to keep your personal property.  The bankruptcy process will actually help protect your personal property, because by not filing your creditors could sue you and take your property through repossession, court action, garnishments, etc.

You will never get credit again

NOT TRUE.  As mentioned above, bankruptcy can help stop bad credit and be the first step toward re-establishing your credit. Filing bankruptcy helps you get rid of your debt, and puts you in a position to handle more credit.  Your debt to income ratio will improve and you'll now look more attractive to credit card companies and banks.  After filing bankruptcy, don't be surprised if immediately after receiving your discharge you start receiving credit card offers from the same companies that hounded you through bill collectors prior to filing.  Of course, your goal should be after filing bankruptcy to start saving money, keep your job, and pay your bills; don't be surprise when banks, credit card companies and other lenders offer you credit.  If within 2-4 years after bankruptcy a client's credit is not re-established enough to buy or refinance a home, the bankruptcy usually has nothing to do with it.

You will never be able to own property again

NOT TRUE.  Many people believe this to be true but it couldn't be further from the truth.  Whatever you buy or own in the future you can keep.  There are no laws that dictate any of your ownership rights over your property after you achieve that bankruptcy discharge and your case is over.  Once the bankruptcy case is over and the case closed, that's it.

You can pick and choose what creditors to put into bankruptcy

NOT TRUE.  You must treat every creditor equally, which means listing every creditor on your bankruptcy petition.  You cannot show favoritism to one creditor and decide not to include them in your bankruptcy.  To do so would be against the bankruptcy laws and a crime.  Of course, if there is one creditor which you want to pay back, there is nothing keeping you from paying that creditor or person back after your bankruptcy case is over.  You just won't be legally bound at that point to pay them back.

Both you and your spouse have to file bankruptcy together

NOT TRUE.  Often it is advantageous for both spouses to file together, and there is typically no increase in cost to do a joint-petition where both spouses are included, but it is not a requirement.  If it doesn't make sense to include your spouse in the bankruptcy filing (maybe because all the debts are in your name) then there is nothing preventing you from keeping your spouse out of the filing.

It is hard to file bankruptcy

NOT TRUE.  You must be very thorough with the information included on your bankruptcy petition and there is considerable paperwork involved, but when you employ a bankruptcy professional the process should be very smooth.  With the help of our Sarasota and Tampa consumer bankruptcy attorneys, the hardest part will be deciding whether to file.  The filing will be easy.

You can't get rid of back taxes in bankruptcy

NOT TRUE.  If the back taxes are assessed more than three years prior to filing the bankruptcy petition they may qualify to be discharged.  There are a few exceptions and variables involved, but if your back taxes qualify they may be dis-chargeable.

You can only file bankruptcy once

NOT TRUE.  You can file bankruptcy as many times as you like, with certain limitations.  Of course, the goal with a bankruptcy is to only need one filing to get your life back on track.  After a chapter 7 discharge you must wait 8 years before filing another chapter 7.  You can file a chapter 13 only 4 years after a chapter 7 discharge.  If your prior filing resulted in a chapter 13 discharge, you can file another chapter 13 only 2 years after the prior case.  If your prior bankruptcy case was “dismissed” as opposed to “discharged” there is no waiting period, however the benefits of the automatic stay are decreased.

Creditors will still harass you after you file bankruptcy

NOT TRUE. The exact opposite is true.  Once you file bankruptcy the “automatic stay” goes into effect and all creditors must cease their collection activities.  This includes their lawsuits, repossession attempts, garnishments, foreclosures, telephone calls, letters, etc..  If the creditors violate this stay they can be sanctioned by the Bankruptcy Court and be required to pay you damages and attorneys fees.  Bankruptcy truly offers immediate relief in this respect!