FAQs : Bankruptcy Lawyers Orlando : Kissimmee : Joseph E. Seagle, P.A., 924 West Colonial Dr., Orlando, FL 32804

Bankruptcy Myths

1. Under the new bankruptcy laws, there is no longer a "Fresh Start Bankruptcy", and I will have to pay back all of my unsecured debts.

This is definitely not true. There was a change in the bankruptcy laws in October of 2005, but it did not get rid of Chapter 7 bankruptcy or the "fresh start bankruptcy". What the change in the law did do, was require all debtor to pass a “means test” that was implemented by Congress to qualify for a Chapter 7. Most people that qualified for a Chapter 7 prior to the law change will probably still qualify. You will need to contact an experienced bankruptcy attorney to determine your eligibility to file a Chapter 7 Bankruptcy.

2. All debts are wiped out in a Chapter 7 Bankruptcy.

This is not true. Not all debts are can discharged in a Chapter 7 Bankruptcy. The debts that cannot be discharged include child support, alimony, most student loans, some taxes, and debts incurred as a result of fraud.

3. I'll never be able to get credit again.

This is perhaps one of the biggest misconceptions about bankruptcy; in fact in many instances it may help you rebuild your credit. Once you file for bankruptcy most of your debts will be discharge, and with the discharge your income to debt ratio will improve drastically which will actually help you in the long run. Also once you file you will soon be getting credit card offers again. These credit cards will most likely have low limits and high interest rates, but the use of these cards will help you to start rebuilding your credit score and you will soon be on your way to having good credit again.

4. I will lose all my possessions if I file for Bankruptcy.

This is absolutely false. In most instances you will be able to keep everything you own. Each state has its own set of exemptions (laws that outline what you are allowed to keep in when you file for bankruptcy). Florida is very liberal with its exemptions; you should ask an experienced attorney for more information on what assets you may retain.

5. Can I keep some credit cards when I file for bankruptcy?

When filing for bankruptcy you cannot pick and choose between who you want to pay back and who you don’t. So the simple answer is no, you cannot keep some of your credit cards, but you can keep those cards that have no balance, because those cards have no debt and do not need to be listed in your bankruptcy.

6. Filing bankruptcy will hurt your credit for 10 years.

This is perhaps the most common misconception. It is true that the bankruptcy is listed on your credit report for 10 years, but that does not necessarily mean that you have bad credit for 10 years. In most instances by the time you need to talk to a bankruptcy attorney your credit is already bad, and the only way to rebuild your credit is to either pay off the debt, or to start over. Now if it was that easy to pay off your debts you would have done it a long time ago, so allowing yourself to start over by filing for bankruptcy may be the next best option.