3 Chapter 7 Bankruptcy Myths

Chapter 7 bankruptcy, also sometimes known as liquidation bankruptcy, is a useful legal tool available to individuals with overwhelming debt obligations. Unfortunately, Ch. 7 bankruptcy has an extremely negative connotation for most Americans. This is likely due to the prevalence of a number of myths and misconceptions about how this process works. This article is meant to address some of the most common of these myths:

Myth: I’ll lose everything I have if I file for Ch. 7 bankruptcy.

Fact: Contrary to popular opinion, all forms of bankruptcy, including Ch. 7, typically allow individuals to keep their most important assets. Those who file for Ch. 7 bankruptcy are typically able to keep their home and their vehicle, as well as most, if not all personal possessions.

Myth: Ch. 7 bankruptcy doesn’t allow you to get rid of tax debts.

Fact: While it is difficult to discharge tax debts through Ch. 7 bankruptcy, by no means is it impossible. Individuals in select circumstances may qualify for partial or even complete discharge of all tax debts.

Myth: My credit score will be permanently ruined if I file for Ch. 7 bankruptcy.

Fact: Filing for Ch. 7 bankruptcy does negatively affect a person’s credit rating. However, most individuals who qualify for Ch. 7 bankruptcy likely already have extremely poor credit scores, and a bankruptcy is unlikely to make them any worse. Furthermore, by undergoing Ch. 7 bankruptcy and removing your debt burden, you may actually be able to improve your credit score in a relatively short period of time.

Contact Us

If you or someone you know has significant debts which have become unmanageable, you should consider the benefits of applying for Ch. 7 bankruptcy protection. Contact the New Orleans bankruptcy attorneys of the Law Office of David J. Kervin, Jr. at 504-599-5906 to discuss the details of your situation with an experienced legal professional and learn more about your options under the law.