Here are some common bankruptcy myths. We encourage you to reference them before, during and after your bankruptcy. For more specific questions, please contact one of our experienced New Jersey bankruptcy lawyers at 856.429.2449 or lperlman@newjerseybankruptcy.com.
MYTH #1: Filing for Bankruptcy Means Losing Everything You Own.
Reality: Exemption law that protect most of your essential belongings, including your car, household items, and a significant portion of the equity in your home. An experienced bankruptcy attorney can advise you on the specific exemptions that apply to your situation and help you safeguard your assets.
MYTH #2: Bankruptcy is a Sign of Financial Irresponsibility.
Reality: Life throws unexpected curveballs. Medical emergencies, job loss, or unforeseen circumstances can lead to financial hardship, even for responsible individuals. Bankruptcy is a legal tool designed to offer a fresh start, not a punishment for past mistakes.
MYTH #3: You will Never Be Able to Get Credit Again After Bankruptcy.
Reality: While bankruptcy does stay on your credit report for 7-10 years, it does not mean you will never qualify for credit again. Responsible financial management practices post-bankruptcy can significantly improve your credit score. Many individuals successfully rebuild their creditworthiness within a few years.
MYTH #4: Everyone Will Find Out You Filed for Bankruptcy.
Reality: Bankruptcy filings are a matter of public record, but the information is not readily accessible to most people. Unless you share it openly, there is no reason for most people in your social circle to know about your bankruptcy unless they are a creditor of yours or searching the court records.
MYTH #5: Bankruptcy is Immoral or Unethical.
Reality: Bankruptcy is a legal right established to provide relief to individuals facing overwhelming debt. It allows for a fresh start and an opportunity to rebuild your financial future.
MYTH #6: Only People with Low Incomes File for Bankruptcy.
Reality: People from all walks of life, including those with seemingly comfortable incomes, can find themselves in situations where bankruptcy becomes the best option. Job loss, medical debt, or unexpected expenses can quickly lead to financial strain, regardless of income level. In New Jesey for example as of 2024 a household of 1 can make up $83,1o2 per year, while a household of 4 can make close to $157,404 and still qualify for Chapter 7 and wipe out debts without a payment plan.
MYTH #7: You Can’t File for Bankruptcy if You Have Student Loans.
Reality: While student loans are generally not dischargeable, there may be options available depending on your specific circumstances. An experienced bankruptcy attorney can advise you on the best course of action regarding student loan debt.
MYTH #8: Filing for Bankruptcy is a Long and Complicated Process.
Reality: While there are steps involved, an experienced bankruptcy attorney can guide you through the process efficiently. They can handle the paperwork, ensure all legal requirements are met, and represent you in court if necessary.
MYTH #9: You Can File for Bankruptcy on Your Own Without an Attorney.
Reality: Bankruptcy laws are complex, and the process can be overwhelming for someone unfamiliar with the legal system. Consulting with an experienced bankruptcy attorney is crucial to ensure your rights are protected and to navigate the process smoothly.
MYTH #10: Bankruptcy is a Last Resort.
Reality: While bankruptcy should not be taken lightly, it is important to seek help before your debt spirals out of control. An earlier intervention can help you explore options to manage your debt and potentially avoid the need for bankruptcy altogether.
