Bankruptcy Mythbusters

Using precise scientific methods, Doan Law Firm tests common bankruptcy knowledge. Will these ideas hold water or will they be busted? Including, "If I file bankruptcy I'll lose everything I have" and "If I file bankruptcy I'll never get credit again". Starring James P. Doan, Esq. and Sara Firoozeh, Esq.

If I file bankruptcy I'll lose everything I have.

That's not true. No one, not even the federal government, wants you living in a cardboard box under a bridge. They have a vested interest in giving you a fresh start – with the tools to allow you to use it. In fact, in most bankruptcies, the debtor gives up nothing. Each state, and the federal government, have specific "exemptions" – those are categories of items and dollar amounts that a debtor is allowed to keep. They cover houses, cars, tools, retirement and many other things the government wants you to retain so you'll continue to be a productive member of society. You can even keep the dog.

If I file bankruptcy I'll never get credit again

Again not true. In fact you're a better credit risk after a bankruptcy than before. Before a bankruptcy your credit's suffering blow after blow. After a bankruptcy, it's knocked out, but standing back up again. Also, after a bankruptcy you're not able to file again for a number of years. The credit card companies know that and that makes you a great credit risk. Even the car companies heard… And they want in on the deal too. As a matter of fact, even mortgage companies will see clear to give you a loan after about 2 years. No loan sharks for you.

I'm so ashamed to be in this position – don't only losers and deadbeats file bankruptcy?

This is no longer your grandparent's bankruptcy. Over half of all Americans are in debt, many very very seriously. They've suffered a job loss, medical crisis or divorce. Some were running so fast to pay everyone that one little hiccup upset the house of cards. Add to this the credit card companies hounding you around every corner; college campuses, concerts, the mall, even in your mailbox daily, and Americans didn't have a chance. Many people, whose names you'd recognize, have received a new start in bankruptcy. As far as bankruptcy filers being losers, I'll let you go ahead and tell Rembrandt and Wayne Newton they're losers.

While we're talking about it, the only reason we know about Rembrandt and Wayne is because they're celebrities. While bankruptcy is a court filing and it's public in that sense, so many people file bankruptcy (over 6,000 a day) that it effectively becomes a private matter; there's no newspaper publication, no skywriter. The only people who know are you, your creditors and anyone you choose to tell. Yes, yes it is, that's why we do it all day as a profession. You don't really want to add bankruptcy filing to your list of hobbies do you? Stick to tennis, scrapbooking, reading, underwater basket weaving and we'll work with the reams of paperwork, numbers and black robed judges. Bankruptcy is complicated and detailed. If you get it wrong you can lose precious rights and assets to which you are entitled. Just like you don't perform your own root canals, leave the financial drilling to the professionals.

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