Bankruptcy - Urban Legends & Myths Part 1

Don't believe all the stories that you've heard about filing for bankruptcy. The reality is that many people have turned their lives around after filing. With a fresh start and the stress over debt gone, they were able to fix their financial mistakes and move on to better their lives.

Here are some Urban legends and myths that persist and the reasons why they are false.

Urban legend 1: You can't file for bankruptcy anymore.

False. The fact is that you can do almost everything under the new law that you could do under the old law. In some ways, the new law actually increased the benefits and advantages of filing bankruptcy.

Urban legend 2: It's really difficult to file for bankruptcy.

Only true, if you are doing it yourself and you are not an experienced attorney. Filling bankruptcy is not hard in the hands of an experienced attorney. For the attorney who specializes in bankruptcy, it is actually easy. The decision to file may be hard but once the decision is made, the filing part is not very difficult. That's why it's important to seek the counsel of an expert attorney before making a decision to file.

Urban legend 3: Only no-good deadbeats file for bankruptcy.

False. Like yourself, many who file bankruptcy are good, honest and hard-working people. Filing bankrupcy is a last resort effort, after months or years of difficulty of not being able to pay their bills. The bills may have happened due to circumstances not under their control, such as a divorce, job loss, a failed business venture, a serious illness, family emergency, or they just didn't know any better and fell into debt at a young age. Setting a budget or managing money is just not taught in our schools, but it is learned often too many times in the school of hard knocks.

Urban legend 4: Filing bankruptcy means you're a bad person.

False. In 2008, over 1,000,000 Americans file bankruptcy and growing and it's not because they're bad people. The economic conditions have dramatically changed during the last couple of years. Many good, honest, hard-working people have fallen under these tough times. Fact is that life can be brutal and sometimes the money's just not there. The new bankruptcy law was formulated with this reality in mind, to make sure that you get free from debt, so that you can have a "fresh start."

Urban legend 5: If you're married, both you and your spouse have to file for bankruptcy. False.

In many cases, if there's a lot of debt between the spouses, it makes sense and saves money for them to both file bankruptcy. This decision would be made after seeking counsel with an experienced attorney. It is never a requirement under the law. There are many cases where just only one spouse has filed.

Urban legend 6: Everyone will know you have filed for bankruptcy.

If you are just an ordinary person and not famous, the chances are very good that only your creditors and the people who you tell will know you filed. Your bankruptcy is a matter of public record, but the filings are so massive and growing every day, that unless someone is tracking down information on you; nobody will even know you filed. So, if you don't want anyone you know that you filed bankruptcy, you need to keep it to yourself. As for newspapers, unless you're well known in your community, they will not print it.

Urban legend 7: Filing bankruptcy will cause more family problems and may lead to divorce.

This is False. While it's true that fighting over money problems is one of the major causes for divorce, filling bankruptcy is not one of them. The problem is not having the money to pay the bills. All people who are honest feel a strong obligation to pay their bills, and not being able to, causes them to feel a lot of nerve wracking stress. Unless this stress is dealt with, the stress can quickly build to tensions that can lead to divorce. The new bankruptcy law is designed give the debtor a "fresh start" and to get you out from under the burden of debt, which can lower your stress level. Like many couples and by working together, you will find that filing bankruptcy, and lowering the stress level can make the relationship stronger.