Bankruptcy Myths


Even though the new Bankruptcy Law passed over 10 years ago (in 2005), misinformation is still everywhere! Here are a few of the most commonly repeated statements that are just plain wrong.

I, Tracy A. Brown (“TAB”) want you to be armed with the TRUTH!

Myth #1 It’s almost impossible to file Chapter 7 now. TAB says: Wrong! In fact, most of the same people who filed Bankruptcy before the law changed can still file today. The IRS has established income guidelines that we have to take into consideration when evaluating your case, but only a small percentage of people are affected.

Myth #2 People who file Bankruptcy are bad with money.

TAB says: Wrong! Lots of studies show the most common reasons people file Bankruptcy are job loss, reduced work hours / loss of overtime, divorce or huge medical bills. Even those who usually avoid credit cards were often forced to use them when they ran out of other options.

Myth #3 I will lose everything if I file Bankruptcy.

TAB says: Wrong! The Bankruptcy Code has a set of built in protections to help you keep what you have. It’s up to the Attorney to make sure you are protected by asking you a lot of questions to get your whole story. We go to Court a lot and we see what happens. Some law firms take shortcuts because they only charge a small fee and don’t spend the time to fully review your case. We can’t figure out why other firms that charge similar fees to ours consistently prepare sloppy cases. Our Attorneys meet on a regular basis to discuss the cases we have seen where people have lost property. We routinely update our Checklists to make sure we are always on top of new developments. It takes time but we take pride in our work and our good reputation.

Myth #4 I won’t be able to get credit for years.

TAB says: Wrong! When your case is Discharged, you can immediately apply for credit. Companies make car loans, mortgage loans and even issue credit cards again. Your interest rate will be higher at first, but when you continue to pay on time, you can request that your interest rate be reduced.

Myth #5 If I file Chapter 13 I will have to pay all my creditors in full.

TAB says: Wrong! If you are delinquent on secured debt (auto, mortgage, furniture, etc.), Chapter 13 helps you make a Plan to keep these items. Part of your payment may go to unsecured creditors (Visa, MasterCard, etc.) but they usually only get a very small percent of what is owed. Even if the new law requires that you repay some of the unsecured debt, the interest goes “poof”. If you have paid 10%, 20% or even 30%, get used to what 0% feels like!!

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

Our St. Louis attorneys represent individuals in the Eastern District of Missouri.