If you have to deal with bankruptcy then the first thing you should do is secure the aid of an attorney. After all, you are bound to have a lot of questions that only he can answer. Most people do not have a lot of knowledge about what a bankruptcy actually means and what it entails and, even worse, most of the things they know are wrong. It is helpful to dispel some of these myths so people have a better understanding.
Bankruptcy Wipes All Debt?
There are people that think that if they file for Chapter 7 bankruptcy their entire debt is wiped clean and they are free to start over again. It does not quite work like that. This is one of the main reasons why people should always consult with a bankruptcy attorney before they deal with this problem. They need to be clear on their current situation. Some types of debts will not be erased, not even by filing for Chapter 7. These debts include child support, student loans and restitutions for criminal acts such as fraud.
Everyone Will Know You Filed Bankruptcy?
Some people are afraid of bankruptcy not because it will cripple their financial situation, but because of what it will do to their reputation. They think that the entire city they live in will be made aware of their financial woes. Again, speaking with a bankruptcy lawyer would help dispel these myths. It is true that bankruptcy filings are public proceedings. However, it is also true that there are so many going on every day that, unless it involves someone famous or the head of a big company, people are unlikely to care or even find out because the papers won’t publish it.
Bankruptcy Takes Away Everything You Have?
This is probably the biggest misconception about bankruptcy. Ask a bankruptcy attorney and he will tell you that this is the biggest reason why some of his clients do not file for bankruptcy when it could be in their best interest. People think that once they are declared bankrupt the government will take away their house, their cars, their money, every single worldly possession in order to cover their debts and they will be left living on the streets. In reality, assets like a house and car are protected under most state laws.