Even after 30+ years of practicing bankruptcy law, we never cease to be amazed at how many bankruptcy myths are believed by most people. Misinformation about bankruptcy abounds. In nearly every free consultation, we dispel at least one bankruptcy myth.

People come to us worried that someone will come take all of their belongings if they file for bankruptcy, or that they’ll never be able to get credit or take out a loan again. Both of these are far from the truth.

In an effort to help people better understand what bankruptcy is (and isn’t), we’ve compiled a list of five bankruptcy myths we often hear.


Bankruptcy Myth 1: Someone will come take all of my stuff.

The truth is most debtors (people who file for bankruptcy) get to keep most or all of their personal belongings. The U.S. Bankruptcy Code, as well as the state of Georgia, carves out exemptions that can be used in Chapter 7 or 13 bankruptcies. Exemptions allow for your property and belongings to be protected through bankruptcy, up to a certain dollar amount. Exemptions are available for your home, car, personal belongings, retirement accounts, and other assets.

If something is “exempt,” it cannot be taken by your creditors or by the bankruptcy trustee to pay back your creditors. View a full list of Georgia exemptions here.

Note that if you file a joint bankruptcy with your spouse in Georgia, you can double the exemption amounts to protect even more of your assets and belongings. If you file for bankruptcy, nobody is coming to take all of your stuff.


Bankruptcy Myth 2: I will never be able to get a loan again.

After bankruptcy people are able to get loans, including car loans, mortgages, and lines of credit.

While bankruptcy does lower your credit score, many people find their credit score begins to recover fairly quickly out of bankruptcy. Prior to filing their credit was taking a hit each month with late payments and increasing debt loads. After filing, they have little to no debt, making their debt to income ratio favorable. Which makes them a viable candidate for a loan or line of credit.

Filing for bankruptcy may temporarily limit your access to credit, or force you to pay higher interest rates for credit you do get. Though many of our clients find that the relief of getting out of debt far outweighs this concern.


Bankruptcy Myth 3: Paying off my debts is better than filing bankruptcy.

To be certain, filing for bankruptcy is a serious financial decision, but that does not mean it is a bad decision. If you can reasonably pay back your debts, then you should. But if you cannot reasonably pay back your debts in two years, then filing for bankruptcy may very well be the better option.

Bankruptcy stops harassing creditor phone calls, collection action, lawsuits, wage garnishments and erases most debts. Bankruptcy brings relief and a fresh financial start.


Bankruptcy Myth 4: My financial future will be ruined by bankruptcy.

No, this is not true at all. For many people, filing for bankruptcy is a good decision for their financial future.

If paying back your debts will take years, and include massive amounts of interest, or late-payment penalties, then erasing debts with bankruptcy is a wise financial choice. Those years of payments can be directed to savings, investments, and retirements accounts, all of which better your financial future.

Also, most retirement accounts, including your 401(k), IRA, and other retirement accounts are protected in bankruptcy.


Bankruptcy Myth 5: Only failures file for bankruptcy.

Bankruptcy is a financial remedy, nothing more. It does not speak to your character, or your morals or ethics. Bankruptcy is your legal right. It does not mean that you are financially irresponsible.

Instead of viewing bankruptcy as a failure, we encourage you to see it for what it really is: a powerful tool that can help you take control of your finances.


We Offer Free Consultations

Meet with us for a free, no-obligation consultation. Call us at right now at (912) 351-9000, or email info@BrazielLaw.com. We are here to give you real information about your rights and how bankruptcy can help you.

We are proud to serve people in Savannah, Richmond Hill, Hinesville, Pooler, Port Wentworth, Tybee Island, Clyo, Ellabel, Midway, Springfield, Pembroke, Brooklet, Garden City, and Ludowici Georgia.

We are a debt relief agency. We help people file for bankruptcy relief under the U.S. Bankruptcy Code.

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