Top Myths About Filing for Bankruptcy  

 Posted on January 22, 2025 in Bankruptcy

For all that bankruptcy can be an effective way to move past financial difficulties, people hold many myths and misconceptions about bankruptcy. Still, it is understandable to be concerned when considering bankruptcy. After all, for most people bankruptcy is a new process and can seem intimidating and complex.

The best way to move past these misconceptions is to research information about bankruptcy and to speak to an experienced Houston, TX bankruptcy attorney about what bankruptcy could actually mean for you — and how it can help you get out from under serious debt.

Myth 1: Bankruptcy Will Permanently Ruin Your Credit

This is one of the biggest and most common myths about bankruptcy. Although a bankruptcy filing can negatively affect credit, and although it stays on a credit report for up to 10 years, that is not the end of the story. Often, people will see their credit actually improve following their bankruptcy filing, especially if they started out with low credit. Additionally, because bankruptcy gives people a financial fresh start, it can make it easier to keep up with payments, which can help increase credit scores.

Myth 2: Bankruptcy Discharges All Your Debt

While bankruptcy does discharge a great deal of debt, there are exceptions. The specifics of the types of debts that can be discharged will vary depending on whether you file Chapter 7 or Chapter 13. Still, generally, most unsecured debt can be discharged in bankruptcy. This means that things like credit card debts, medical debt, and personal loans are dischargeable. However, other types of debt such as child support and alimony cannot be discharged in bankruptcy.

Myth 3: People Who File for Bankruptcy Are Financially Irresponsible

Good people go through hard times. Sometimes even the most financially responsible individuals face life events such as medical emergencies, divorce, or the loss of income that can lead to financial difficulties and having to file bankruptcy.

Myth 4: If You File Bankruptcy You Will Lose Everything 

Another persistent myth is that if you file bankruptcy you will lose everything. That is simply not the case. Again, the specifics will depend on the type of bankruptcy that you file, but many assets are exempt from bankruptcy. This means that you can keep things like your home, car, and other property even while going through bankruptcy. Luckily for Texas filers, the state has some very generous exemptions as well.

Contact Our Conroe, TX Bankruptcy Attorney

It is understandable to have misconceptions about bankruptcy. Yet if you face significant debt and are considering bankruptcy the experienced Austin County, TX bankruptcy attorney is here to debunk some of these myths. At The Fealy Law Firm, PC we help good people like yourself through hard times. Call us at 713-526-5220 to schedule a complimentary and confidential consultation.