Myths of Bankruptcy

Myths of Bankruptcy

town-sign-96612_960_720Educating New Jersey Clients on the Myths of Bankruptcy

When facing seemingly insurmountable financial problems, consider a bankruptcy filing. Bankruptcy is an option that scares most people. They often believe that:

  • filing for bankruptcy will tarnish their reputation,
  • only irresponsible people file for bankruptcy,
  • they will lose everything they own, or
  • their credit will be permanently ruined.

Some believe that filing Chapter 7 will wipe away all debt, and that is not the case. A lot of factors that frighten our clients are just not true. Cohn Lifland offers New Jersey clients compassion and dedication as they go through the process of bankruptcy. Though it may be tough, it is not impossible to endure. Allow our attorneys to guide you through your legal options as you try to right your financial ship. Don’t allow the myths of bankruptcy to scare you away from the process.

My Reputation Will be Ruined

The only people who should know that you are filing for bankruptcy are your creditors. Sometimes a high-profile individual or a major corporation is in the media for filing bankruptcy. You may be nervous to file for bankruptcy because you don’t want to tarnish your reputation. Your ordeal should be a private matter and the only people who will know should be the creditors, the trustee, you and anyone you may have told. Though bankruptcy is a public legal proceeding, the number of cases is so massive that few publications have the ability to run them all.

Only Financially Irresponsible People File for Bankruptcy

This is a misconception that frightens many of our clients. Though there are cases that fit the bill, many bankruptcy cases are related to a major life experience. Far more people file for bankruptcy when faced with a loss of employment, a divorce or a serious illness than those who are financially irresponsible. When a person loses a job and cannot recover from the loss, he or she continues to have bills. When those bills rise to a dire level, they may have to consider filing for bankruptcy. Those who face divorce may have to file because of the financial strain of legal costs and the bills of running two households after a divorce. When someone faces a serious illness, the high cost of medical care may have ruined their stable financial situation, pushing them towards bankruptcy. Though bankruptcy is a difficult situation, it does not necessarily mean that you are irresponsible.

I Will Lose All of my Possessions

This is false. This misconception is one of the most frightening parts of bankruptcy. People who should file for bankruptcy are often scared away from the process because they are afraid they will lose everything they own. The truth is, most debtors retain their possessions either because of legally created exemptions or creating an approved Chapter 13 plan.

I Will Never Get Credit Again

Many debtors are able to re-establish credit after the completion of a bankruptcy.  The process varies among individuals. but many lenders stand ready to provide credit cards or other financing to those who demonstrate steady income post-bankruptcy.

Contact Cohn Lifland

Cohn Lifland has years of experience guiding clients through bankruptcy cases. Though bankruptcy is a difficult situation, it is not impossible. Contact our firm to guide you through your legal situation. Our compassionate attorneys know that these times can be tough and you deserve representation that has your best interests in mind and can ease your stress in your time of need. Contact Cohn Lifland today.


Jeffrey W. Herrmann

Cohn, Lifland, Pearlman, Herrmann and Knopf LLP