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Myths in Bankruptcy

Over the years and after meeting with thousands of debtors, I have heard many bankruptcy myths from the people I meet with. I am always glad when these myths are brought up so that I can answer questions, settle doubts, and provide accurate information to clients. This way, they know what to expect in a bankruptcy. Let’s see if we can bust some of the most commons myths out there.

  1. I heard you can only file bankruptcy every 7 years? Incorrect. The restrictions on filing for bankruptcy again depend on what kind of bankruptcy you previously filed and what kind of bankruptcy you are now wanting to file.
    1. If you file a chapter 7 bankruptcy, you will be eligible to file another chapter 7 bankruptcy after eight (8) years have passed since the day of the first filing. In simple terms, you can get a chapter 7 discharge every 8 years. If your first filing was a chapter 13 bankruptcy and you now want to file a chapter 7 bankruptcy, you must have waited six (6) years or meet fairly strict requirements regarding the amount of debt that was paid back in the first case.
    2. If you want to file a chapter 13 bankruptcy, get a discharge, and the prior filing was a chapter 7, you must wait four (4) years to file. If the prior case was a chapter 13, you can file another chapter 13 and get a discharge after two (2) years. This is not easy to do as most chapter 13 bankruptcies are at least three (3) years long, however.
  2. My friend tells me that their attorney made it so they could keep their home, trailer, vehicles and boat! That could be the case, but do you know what kind of bankruptcy they were in? Were they paying back all their debt in full? It is never fair to compare your case to another’s. Every case is different.
  3. I heard that once I file a chapter 7 bankruptcy, I won’t be able to buy a car for a long time. Most bankruptcy filers will receive advertisements after they file their bankruptcy from both credit cards and car dealerships. Of course, the interest rates are going to be higher than usual, but they will offer you credit. Whether or not you should take the offers is a discussion for another day.
  4. I heard that married spouses both have to file. Untrue! If you are married, you are not required to file if your spouse does. However, your income will be used to determine what type of bankruptcy should be filed.
  5. You’ll lose everything in bankruptcy! Rest assured that if you file for bankruptcy, you will not lose everything. In fact, your flat screen televisions and watches are usually worthless to a creditor. Work closely with your attorney to make sure that all your stuff is protected.

About the Author: Attorney Russell Evans

Attorney Russell “Russ” Evans helps clients with chapter 7 and chapter 13 bankruptcy cases at the full-service law firm of Pearson Butler, offering legal counsel in both fluent English and Spanish. He is proud to have helped thousands of Utah residents get a fresh start. When he is not in the office, he serves on the Bankruptcy Rules Committee and the Utah Bankruptcy Law Forum committee.

If you would like to meet to discuss your financial situation with Attorney Evans, call Pearson Butler’s South Jordan office at (800) 265-2314 for a free consultation.