Myths About Bankruptcy

If you live in the (519) area code call 310 John and we can help you sort through your debt issues.

I will lose my house
Chances are you won't lose your house. Each situation is different and each lender is different, but if there is not a lot of equity in your house, there is a good chance that it can be arranged so you can keep your house.

I will never get credit again
Not true. There is a reason that second, third and fourth time bankruptcies are filed. It’s because people get credit again.

My name will be in the paper and everyone will know
Probably not, all corporate bankruptcies are advertised in the paper, but the majority of personal bankruptcies are not advertised. There are times when it would have to be, but it is only when there is a large enough amount of assets.

I can't control your own money again?
The trustee does not put you on an allowance and doesn't control your spending. In fact, you should have a bank account; through the mandatory counselling you will learn how to manage money.

I will be bankruptcy for seven years
Bankruptcy proceedings for a first time bankrupt may be as short as little as nine months. Seven years is the maximum period of time which a credit reporting agency can report your bankruptcy on your credit file, however, we have seen many people obtain mortgages to purchase houses in as little as two years after they are released from bankruptcy.

My spouse will also have to file bankruptcy
Not true. Spouses are not liable for each other by virtue of their relationship. You become liable for each other by signing contacts together or by co-signing for each other. If your spouse doesn’t have joint debts with you, or has not co-signed for you, your spouse is not liable for you.

If I file bankruptcy I am breaking a law
Not true. If you file bankruptcy, you are using a law that was designed to allow you a fresh start.

I can't file bankruptcy if I owe the Government money
Not true. Many people file bankruptcy because they are unable to service their obligations regarding government debts.

Bankruptcy won't get ride of my student loan
Student loans are treated different from other debts as they were made with the intention that a person will benefit financially, in future years, from the education they obtained with that debt. Accordingly, there is a period of time after the studies that a person cannot file bankruptcy on a student loan. The period of time has changed a few times over the past number of years; however it now is set at seven years. Therefore, if a person files bankruptcy and includes student loan debt, the debt is dischargeable provided they have been out of school for at least 7 years. For more about this see student loan bankruptcies.

If I file bankruptcy I won't have to pay child/spousal support
No, you will still have to pay support and if your wages are being garnished for child and/or spousal support, the garnishment will continue.

If I am going to go Bankrupt I should max out all of my cards
It is sad that this type of advice is out there. I am often asked this question and people tell me that they were advised to do this. If you know that you are in financial problems STOP using the cards. By going out and incurring more debt that you know you can't pay for, is committing fraud. Credit card companies do look at these types of transactions and they will oppose a person's discharge from bankruptcy if things like this are done.

Trustees in Bankruptcy are scary
Some might be, but I am not.