Common Bankruptcy Myths

Orange County Bankruptcy Attorney Joseph M. Tosti

You no doubt have heard the myths about bankruptcy.  Most people are terrified of filing for bankruptcy even when it would save them from financial ruin.  You actually end up in a stronger financial condition after bankruptcy than you would if you just let your creditors remain unpaid, in many cases.  Here are some examples of common myths about bankruptcy filings:

"I will lose all my property if I file for bankruptcy."

In fact, nothing is further from the truth.  95% of the individuals filing for bankruptcy do not lose any of their property!  Many assets are protected by bankruptcy laws, and when you contact an Orange County bankruptcy attorney from the Law Offices of Joseph M. Tosti, the attorney can advise you how this will work in your case, and what property is exempt in California law.

"Only a deadbeat would file bankruptcy."

Thousands of responsible people file bankruptcy.  Something has happened in their lives, either losing a job, getting a divorce, or medical bills from an illness or accident has caused them to file bankruptcy.  Many top businessmen and respected individuals have a bankruptcy in their past, and it is not correct to consider anyone is a deadbeat when they take advantage of the opportunity given by the federal government to make a fresh start. 

"If you are married, both spouses must file bankruptcy."

This is not true.  One spouse can file bankruptcy and the other spouse is not involved in the bankruptcy at all.  They often gain benefit from the filing of their spouse, as the creditors are no longer calling the home.  In many cases, a large portion of the debt owed is under the name of only one spouse.  This can occur in a marriage when one person entering the marriage comes with huge debts.

"It is okay to run up your credit cards prior to filing bankruptcy."

Don't try this - it is not true.  If you recently put a lot of charges on your credit cards, just prior to filing bankruptcy, they will not be allowed to be discharged with other debts, and you will owe those debts.

"If I file for bankruptcy, I will never have good credit again."

If you are considering filing for bankruptcy, it is likely that your credit is already in bad shape.  In fact, when you file for bankruptcy, your amount owing will often show $0.00.  This is better than an endless stream of late or overdue credit card and loan payments.  Ordinarily, if you have a steady job and paycheck, credit can be reestablished in 2 - 3 years after filing for bankruptcy.

"I don't need a lawyer to file bankruptcy."

This is actually true.  You can try it on your own, but it is likely that you will immediately regret this decision!  If you do not file the papers required correctly, you may be denied the right to file for bankruptcy.  You are not familiar with bankruptcy law, the means test or any of the other crucial factors in a bankruptcy filing.  Doing it on your own is very risky and has been unsuccessful in many cases. 

Contact an Orange County Bankruptcy Attorney from the Law Offices of Joseph M. Tosti if you are seeking an experienced bankruptcy attorney to assist you in legal debt relief actions.