When it comes to bankruptcy, there are several misconceptions and myths floating around.  This misinformation often persuades individuals not to avail themselves of the benefits of a bankruptcy filing. Below is an account of the most common misconceptions regarding bankruptcy.

I will lose my property. This is generally not the case.  In many cases, debtors do not lose or have to give up any property.  In a Chapter 7 Bankruptcy, most assets are exempt from liquidation. Florida, especially, provides very generous exemptions.  Only non-exempt property is subject to liquidation.  In a Chapter 13 case, debtors’ assets are fully protected so long they comply with their payment plan. 

Everybody will know.  Although bankruptcy filings are a matter of public record, unless you are a high profile individual, it is unlikely people will find out about the case.  Of course, all your creditors will be notified of your filing, and if someone, an employer, potential employer, landlord, or an interested individual obtains a credit report, or sets to find out specifically whether you have filed for bankruptcy, they will have that information available through the appropriate sources.

My credit will be ruined forever or I won’t get credit for 10 years after my filing.  The filing of a Chapter 7 case will stay on your credit report for 10 years.  However, you will be able to access credit shortly after your bankruptcy, and you will be able to rebuild your credit within 2 years of your bankruptcy.    Since bankruptcy reduces your outstanding debt, some lenders actually see you as a good candidate for new credit.

I don’t have to include a creditor if I am current and intent to continue to pay.  Many debtors would love to keep their Macy’s credit card, or other department stores credit card, or they feel they must keep their commitment to repay their friend or family member who aided them in a time of need.  However, you must include all your creditors and debts in your bankruptcy petition.  Institutional lenders will most likely close your account upon your bankruptcy filing.  You are allowed to reaffirm your debt with a particular creditor if you desire to continue to have the legal obligation to repay them after bankruptcy.

Filing for Bankruptcy is simple.  Filing for bankruptcy is a lot more than filling out a few forms.  Bankruptcy is a serious legal proceeding; every form submitted in bankruptcy has legal implications.  Although bankruptcy generally is not adversarial, even in a simple case there is potential for litigation and loss of assets if not done correctly.  For more information on Bankruptcy visit www.kelleylawoffice.com.

—Craig I. Kelley, West Palm Beach Bankruptcy Attorney of Kelley & Fulton, P.L., represents individual and business debtors and creditors in Chapter 7, 11, 12, and 13 proceedings. He is A.V. rated by Martindale-Hubbell directory, which is the highest rating as voted on by his peers in the legal profession. He is an Adjunct Professor of Bankruptcy Law at Palm Beach Community College and lectures nationally on the subject. You can get more information about bankruptcy from an experienced bankruptcy attorney in West Palm Beach by contacting Craig I. Kelley at 561-491-1200 or by emailing info@kelleylawoffice.com.”