Bankruptcy Myths

Bankruptcy Myths

Facts from a Chicago Bankruptcy Lawyer

Bankruptcy was established by the federal government as a means for individuals, families, and businesses to obtain relief from the burden of overwhelming debt. Unfortunately, there are a number of myths and misconceptions associated with the subject. Debtors in financial difficulty need to understand the truth about bankruptcy - its advantages and consequences - in order to obtain the benefit of this important debt relief option.

At Smith Ortiz, P.C., we are dedicated to helping families and individuals struggling with debt and financial instability. We have provided here the truth about some common bankruptcy myths to give you a better understanding of what bankruptcy really is.



MYTH: Since the law was changed, many people are not eligible to file bankruptcy.

FACT: Most people who would have qualified to file for Chapter 7 before the law was changed in 2005 still qualify to file. For those who are not eligible for Chapter 7, Chapter 13 is a valuable debt relief option. Some debtors who file Chapter 13 pay less to their creditors now than they would have paid before the law changed in 2005.



MYTH: The newspaper publishes a list of people who have filed bankruptcy.

FACT: Newspapers in most areas never publish any personal bankruptcy information.



MYTH: You can only file bankruptcy once.

FACT: It is possible to file bankruptcy more than once. If you file Chapter 7, you may not file again within an 8 year period, but you can still file Chapter 13 within that period.



MYTH: If I file for bankruptcy, my spouse will have to file also.

FACT: One spouse can file without the other. However, if both spouses have debts together with shared liability, they should file together to prevent creditors from demanding payment of the entire amount of the debt from the spouse who did not file.



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