3 Big Myths About Bankruptcy

There are a lot of ideas out there about bankruptcy that are less than correct. These myths can misinform, misdirect, and even lead you down a path to a bad financial choice. Knowing what is real and what is a bankruptcy myth can keep you on a solid financial footing.

Myths About Bankruptcy

The first big myth is that people can file for bankruptcy as many times as they need. The fact is that there are strict limits now in place dealing with how a debtor can file and for which types of bankruptcy. Chapter 7 comes with an eight-year hold that will keep you from filing for it again for another eight years. Chapter 13 filings present a similar hold, but with a four year term.

The next big debunked bankruptcy myth is that it can resolve any debt. Child support, student loans, and a variety of taxes are not likely to be cleared after filing for bankruptcy. Filers must list all of their debts, not just those that they pick and choose.

Another myth worth busting is the idea that filing will cost you your job. This isn’t actually the case. Employers need their employee’s permission to check credit ratings and the like, but even if they do find something that they don’t like, there are statutes in the Bankruptcy Code that prevent discrimination against debtors.