Unfortunately, bankruptcy in America has a negative stigma, and is therefore rarely discussed. Because of this, people often believe things about bankruptcy and debt that just aren’t true. We hope to illuminate the subject with a little game of true or false.
True or False: Bankruptcy in America
- Creditors will never stop trying to get money from you, even if you file for bankruptcy.
This is false. Once you’ve filed for bankruptcy, you will receive an automatic stay which legally makes creditors stop harassing you. Also, once your debts have been discharged by bankruptcy, you no longer owe the debt, and creditors are unable to take any action against you.
- You have to give up your car, home, and other assets when you file for bankruptcy.
This is false. Most people who file for bankruptcy have very little in the way of assets and property, but what they do have is very commonly protected using various bankruptcy exemptions. Most who file bankruptcy never give up anything.
- 820,000 people filed for bankruptcy in 2014.
This is true. There was understandably a huge spike in the rate of bankruptcies between 2008 and 2012, but since then it has continued to dwindle. However, there are still a lot of people filing for protection, and even more who probably should file, but are too afraid.
- You’ll never be hired again after you file for bankruptcy.
This is false. Employers may run a credit check when hiring you, but they cannot discriminate against you because you have filed bankruptcy in the past.
- Chapter 7 bankruptcy takes between three to four months from start to finish.
This is true. Chapter 7 bankruptcy is often a great choice for people with little or no income and high amounts of unsecured debt. It’s about as quick of a fix as it gets for debt problems.
- Married couples must file bankruptcy together.
This is false. While most couples do end up filing bankruptcy together, you do not have to. It may be possible in some situations for just one spouse to file bankruptcy, thereby leaving the other’s credit without a mark.
- Filing bankruptcy will permanently ruin your credit.
This is false. A bankruptcy will show up as a mark against you on your credit report for as long as 10 years, but you will be able to rebuild your credit. Actually, it’s much easier to build credit after bankruptcy for many people.
- All of your debt will be completely discharged in bankruptcy.
This is false. Most debt is completely dischargeable, such as credit card debt, medical bills, and even personal loans from friends and family. However, there are a handful of debts which are impossible or extremely difficult to have discharged. Student loans are very difficult to get discharged, and most taxes are not dischargeable.