Myth: Everyone Will Know I Have Filed Bankruptcy
Reality: NOT TRUE

Prominent persons such as politicians, etc. and major corporations may have their filing picked up by the media. For most of us, however, chances are high that the only people who will know you filed bankruptcy are your creditors and those you choose to tell. Although bankruptcy is a public record, there are thousands of filings in El Paso each year and unless someone is specifically attempting to track down information on you, there is almost no likelihood that anyone will even know you filed unless you tell them or someone they know and would be likely to receive gossip from.

Myth: You Can Only Obtain Bankruptcy Relief Once
Reality: NOT TRUE

There are, however certain restrictions on how often you can obtain relief from overburdening debt. Generally, you can only obtain a discharge of overburdening debt in a Chapter 7 bankruptcy every 8 years or 6 years following a Chapter 13 bankruptcy. There is no such limit on the availability of a Chapter 13 discharge.

Myth: You Will Lose All Of Your Stuff
Reality: NOT TRUE

For various reasons, many people think that if they file bankruptcy, they will lose everything they own. That belief is simply not true. Most times, a person filing bankruptcy is able to keep absolutely everything they ownand doesnt lose anything. This is because federal law allows you to remove or exempt certain property, such as your home, car, some money in your bank account, typical household furnishings and goods, as well as at least $1,000,000 in a typical I.R.A., or possibly more in a 401K, or 457 retirement accountfrom the reach of creditors. You are, however, typically required to continue paying on a loan that you obtained to purchase property you would like to keep (i.e. home loan or car loan).

Myth: You Can’t Discharge Medical Bills In Bankruptcy
Reality: FALSE

This is false and sounds like a bill collectors version of the law. Medical bills are typically unsecured debt the same type of debt as credit card debt. Unsecured debt is usually one of the easiest to eliminate in bankruptcy.

Myth: You Have To Be In A Lot Of Debt In Order To File Bankruptcy
Reality: FALSE

Federal law does not require a minimum amount of debt. You will need to determine that bankruptcy is the best option in your situation. Bankruptcy is powerful relief that should be used wisely and only under the right circumstances. If you are overwhelmed by debt, being harassed, borrowing to pay monthly bills, or in danger of losing your home or car, bankruptcy may be the appropriate solution.

Myth: If You File Bankruptcy, You Can’t Get Credit For 10 Years
Reality: FALSE

This is absolutely false. People who file Chapter 13 bankruptcy are able to borrow during their re-payment plan. Further, people who file for Chapter 7 bankruptcy typically get flooded with credit offers, albeit not on the most favorable credit terms, after their bankruptcy is approved. With spotless credit during the two years following a bankruptcy, people are typically able to obtain loans to purchase homes. In fact, clearing unmanageable debt once and for all is, for many, a fresh start that begins to gradually improve their credit.

Myth: Chapter 13 Bankruptcy Plans Require That You Pay All Debt In Full
Reality: DEPENDS

This may or may not be true and depends on your situation. The fact is, Chapter 13 debt repayment plans range from plans that pay general unsecured creditors nothing to plans that pay back 100%. To determine what percentage of unsecured debt you would be required to repay during Chapter 13 bankruptcy, factors to include your debt, disposable income, living expenses, and expenses on property you purchased on credit. Please schedule an appointment to obtain a better idea of how much unsecured debt you will be able to get rid of.

Myth: Bankruptcy Means You Have Failed Morally Or Personally
Reality: FALSE

The vast majority of bankruptcy filings result from job loss, divorce, or illness, factors largely out of anyone control. Bankruptcy is a tool to get back on your feet and become productive again.

Myth: Bankruptcy Costs Our Society Too Much
Reality: FALSE

Credit Card companies consistently show substantial double digit profits even though a small portion of loans are discharged in bankruptcy. The fact is, the interest on loans provided by banks routinely account for the chance the debt will not be repaid.

Myth: Married Couples Must File Bankruptcy Together
Reality: NOT TRUE

However, spouses may file a joint case together. When a couple don’t file together, careful attention must be given to determining what property is legally part of the bankruptcy estate and what property is not.

Myth: Bankruptcy Will Not Get Rid Of Old Income Tax Debt

Income tax debt more than 3 years old can be eliminated when certain qualifications are met. Withholding or sales tax cannot be eliminated through bankruptcy. Consult with your attorney to determine whether you meet the qualifications necessary to eliminate income tax over 3 years of age.

Myth: Filing Bankruptcy Leads To Family Problems And May Even Result In Divorce
Reality: NOT TRUE

Bankruptcy is typically not the problem. Instead, the problem is out of control debt, the inability to pay bills, and the fear of losing marital property that causes tremendous stress. Bankruptcy stops creditors, at least temporarily, while your finances are being sorted out by the Court. Because of this as well as the elimination of certain debt and/or the ability to pay for property you have bought on credit over time without losing it, many people will reduce family stress, a vital component to the continuation of any healthy and loving relationship.

Myth: If You File Bankruptcy, Creditors Can Still Harass You

The filing of a bankruptcy STOPS creditors from calling you, writing you (except through your attorney and the bankruptcy court), filing or proceeding with a lawsuit, placing most liens on property, etc. Creditors who continue to harass you after you have filed bankruptcy can be subjected to strict fines and other penalties for violating federal bankruptcy law.