Common Misconceptions
Misconception #1: You can be an intentionally irresponsible consumer
The Facts: False. Some people have abused the Bankruptcy Code in the past by irresponsibly maxing out several credit cards with little or no intention of ever making payments toward those debts. Once upon a time (prior to the passing of the new bankruptcy laws in 2005), a person could file bankruptcy multiple times over the course of a few years. The new law, which is termed The Bankruptcy Abuse Act. Prohibits multiple filings in a given time period and also will force a debtor to pay back at least partial amounts of their debt.
Misconception #2: You can file bankruptcy as many times as you would like
The Facts: False. See Misconception #1
Misconception #3: All your debts will be discharged
The Facts: False. In some extreme cases, all debts will be discharged. In most cases certain debts such as student loans and taxes still require payment.
Misconception #4: Filing bankruptcy won’t affect your husband/wife’s credit
The Facts: False. While there are laws that protect spouses from the other’s debt history, if one or more joint accounts are discharged during a bankruptcy filing, it will negatively affect the other’s credit rating. This is regardless if the spouse filed bankruptcy or not; a bankrupt account is a black mark on a credit report.
Misconception #5: You can file joint bankruptcy without the consent of the other spouse
The Facts: False. If one spouse wishes to file bankruptcy in order to discharge debts incurred together, both spouses must agree to file bankruptcy.
Misconception #6: You don’t have to include all debts in the bankruptcy filing
The Facts: False. Some debtors may wish to not include certain debts in their bankruptcy proceeding because of a deep seeded urge to pay those debts. Bankruptcy is an all or nothing game in which all debts must be included. You may not pick and choose the ones you wish to have discharged.