Bankruptcy Myths - West Chester Bankruptcy AttorneyDon’t let the bankruptcy myths fool you. Bankruptcy isn’t the end of the world, nor is it an option only for the desperate. On the other hand, it’s not all sunshine and roses, either, or an easy out for all your financial woes. Annually, close to 1.5 million Americans file for bankruptcy, some of them falling for the myths and others just looking for a financial last resort — which is what bankruptcy is for.

Too many of us fall for myths about bankruptcy that can be more damaging than the process itself. By now, you’re probably wondering what’s true and what isn’t. Learn more about the five most common bankruptcy myths below.

Myth #1: Bankruptcy Fixes Everything

Bankruptcy is far from a cure-all. It’s expensive (the cost may be in excess of $1,500, all told), and what you can “cure” depends on the type of bankruptcy you take. While you can discharge certain unsecured debts with a Chapter 7 bankruptcy, not everything qualifies. If you go the Chapter 13 route, you’ll end up paying off your debt via a court-determined payment schedule.

Bankruptcy doesn’t solve all problems. It just adds more. It’s a major life-disruption, and you have to accept a significant downward adjustment to your lifestyle.

Myth #2: Bankruptcy Discharges All Your Debts

This is one of the more hurtful myths, and one reason why you need legal assistance with your bankruptcy. No bankruptcy will discharge all debts — mostly just unsecured debt, like credit cards and signature loans. Despite popular misconception, you won’t be able to start completely fresh after a bankruptcy. Debt not discharged by bankruptcy includes:

  • Spousal support (alimony)
  • Child support
  • Most taxes
  • Secured loans
  • Mortgages (depending on the state)
  • Restitution for a crime
  • Most student loans

If you’ve filed bankruptcy to avoid those debts, you’ve fallen for a myth. You may not even be eligible for a Chapter 7 bankruptcy, which is the kind most people think of when they consider bankruptcy.

Myth #3: You Can Spend Like Crazy Before Your Bankruptcy, Then Discharge That Debt

Not so, even with unsecured credit. The court and the credit card companies will check your spending patterns to determine if you deliberately tried to game the system. If you have, they’ll charge you with fraud. You can’t discharge fraudulent debts.

Myth #4: Only Financially Irresponsible People File for Bankruptcy

Actually, bankruptcy is more likely to be a last refuge for people going through a major life crisis — divorce, business failure, long-term unemployment, high medical bills, or serious illness. Few people make it their first choice, because it’s messy, painful, and expensive.

Myth #5: Bankruptcy Destroys Your Credit For Good

Tell that to the people who start getting credit card offers in the mail within a month or two after concluding a bankruptcy. You may be pleasantly surprised to learn that this is just one of the common bankruptcy myths. You can get a secured credit card fairly quickly, and a regular credit card within less than a year after you complete bankruptcy. Be sure to check your credit report to make sure that everything that was supposed to have been discharged has been marked as discharged. With that out of the way, you can slowly rebuild your credit — while taking care to spend within your means in the meantime.

Learn More About Bankruptcy Myths

Bankruptcy may be scary, but the laws are there to aid you in your time of need. We’ll help you avoid any bankruptcy myths that might hinder your progress. If you live in or near West Chester, Middletown, or Cincinnati, Ohio and you’re looking into bankruptcy options, call The Andrade Law Firm at for a free case evaluation.