Consumers who are in financial distress and considering bankruptcy frequently delay seeking assistance because of myths about bankruptcy, and fears about the ability to obtain credit in the future. Some of the myths are shared by friends, family or coworkers while other myths are perpetuated by creditors and collection agencies seeking to collect their money. Eventually, these consumers will face a foreclosure, lawsuit, or wage garnishment, and their concerns about popular bankruptcy myths are overcome by the urgency to seek relief. This article will address some of the common myths about bankruptcy that our firm is encountered in over 50 years of bankruptcy practice.

I will lose everything. Georgia law allows abundant exemptions in bankruptcy to protect residences, vehicles, retirement accounts, tools of the trade, household goods, and other assets. As part of the consultation at Leiden and Leiden, our attorneys will identify all of your assets, and verify that they can be protected in a bankruptcy. If the assets cannot be protected in a Chapter 7 bankruptcy, then a Chapter 13 bankruptcy  repayment plan may be an option to allow you to protect the assets.

Everybody will know that I filed bankruptcy. All communications with a bankruptcy attorney are confidential, and no information can be released to third parties without your permission. Bankruptcy filings are not printed in the newspaper, like other legal notices (such as foreclosures, domestic notices), unless the case has some type of public interest. In a Chapter 7 bankruptcy, the only parties that will be notified of your bankruptcy filing would be your creditors, cosigners, and anyone to whom you may owe domestic support obligation. In a Chapter 13 case, debtors who have wage or salary income will make their Chapter 13 payments through a salary deduction order, which means that their employer will be notified as well.

My case will probably not be successful. Eligibility to file a bankruptcy will be based upon your state of residence, your household income, and the outcome of any previous bankruptcy cases. In a consultation with our office, all of your income information will be evaluated to determine if you meet the guidelines for filing a Chapter 7 bankruptcy, or if you would be required to file a Chapter 13 bankruptcy. Any risk that would prevent a consumer from successfully completing a Chapter 7 or Chapter 13 bankruptcy will be addressed by your bankruptcy attorney before the case is filed.

I will never be able to obtain credit again. By the time that most consumers make the decision to meet with a bankruptcy attorney, their credit is already in disrepair. Recently, Chapter 7 clients have reported that their credit score has improved immediately after a bankruptcy filing, usually because they are eliminating a significant amount of debt. This in turn improves their debt-to-income ratio, which is a factor that lenders consider when extending credit. Many consumers have a mistaken belief that they will be barred from obtaining credit for 7 – 10 years after their bankruptcy case is filed. While a bankruptcy filing may be reported on your credit report for that period of time, that does not mean that a discharged debtor would be prohibited from obtaining a loan.

At Leiden and Leiden, we offer a free bankruptcy consultation at which all of these concerns will be addressed, as we evaluate your eligibility to file a bankruptcy case, and the ability to protect your assets. Don’t let these bankruptcy myths deter you from seeking assistance, especially if you are unable to manage your debts as they come due.