When you are considering bankruptcy to address insurmountable debt, it can feel like wading through a sea of misinformation.
Myths abound—some as alarming as they are untrue. Below, we debunk four of the most prevalent myths about bankruptcy to help you better understand this financial remedy.
1. If married, both spouses must file
Contrary to popular belief, filing for bankruptcy doesn’t always require both spouses. In many cases, one spouse can file individually, particularly if the debt is solely in their name. However, if both partners are liable for substantial debt, joint filing may be more practical.
2. Only the wealthy are eligible
It is a common misconception that bankruptcy is a tool reserved for the wealthy. In reality, bankruptcy exists to assist individuals from all walks of life, providing a legal pathway to financial stability. Whether a business owner is facing overwhelming debt or a single parent struggling to make ends meet, bankruptcy can offer relief.
3. You will lose all or nothing
Bankruptcy isn’t a black-and-white scenario where you lose everything or nothing. In Chapter 7 bankruptcy, certain assets might be liquidated to repay creditors, but many exemptions protect personal property like your home, car and retirement accounts. Conversely, Chapter 13 allows you to keep your assets while you repay your debts through a court-approved plan.
4. All debts will be discharged
While bankruptcy can provide significant relief, it won’t wipe out all debts. Some obligations, such as child support, most student loans and certain tax debts, typically remain after bankruptcy. Understanding which debts are dischargeable is crucial in managing your financial expectations.
By separating fact from fiction and seeking legal support, you can make informed decisions and proceed with a Massachusetts bankruptcy confidently.