1. If I file for Bankruptcy I will lose all of my property.

This may be the biggest misconception surrounding filing for bankruptcy. Every person who files for bankruptcy can protect a certain amount of property while still eliminating all or a portion of their debt. Depending upon the state in which the person lives, there are state and/or federal exemption laws that permit a person to shield a certain value in property. In most Chapter 7 bankruptcy cases, people keep all of their property. They can even keep their homes and cars provided that they continue to make timely payments on those items.

2. If I file for Bankruptcy Everyone Will Know About It.

Unless you're a celebrity, the fact that you filed for bankruptcy will not become generally known. A person would have to know exactly where to look to see if your name was among the recent filings. You can even prevent your current employer from learning about your filing. An exception to that would be if bankruptcy papers needed to be sent to stop a garnishment.

3. If I file for Bankruptcy I Will Never Get Credit Again.

This is simply not true. In fact, many lenders aggressively target those that have recently filed. Although the interest rate may be higher than normal, the opportunity for credit still exists. If a person can wait two years before seeking credit after a bankruptcy, he will see an interest rate much closer to that of a non-filer. With regard to autos, it's relatively easy to obtain financing after a bankruptcy. In fact, some lenders will even provide financing before the current bankruptcy case has ended. In any case, the evidence of bankruptcy filing will be removed from a credit report after 10 years.

4. If I file for Bankruptcy All of My Debts Will Be Wiped Out.

This all depends upon the type of debt that a person has. In some cases, there are debts that are not eliminated. These may include student loans, recent taxes, child support, maintenance, parking tickets and debts incurred through fraud. Consult with an experienced bankruptcy attorney to discuss the particular debts that you have and the likelihood that they will be eliminated.

5. If I file for Bankruptcy I Can Choose Which Creditors to List.

All of your creditors must be listed on your bankruptcy petition. Although you can voluntarily pay back any creditor you desire, you cannot omit that creditor from your list of creditors. Clients often like to keep a credit card free and clear from their bankruptcy filing. They think that by not listing the particular creditor, they will be able to keep the credit card and continue to use the charging privileges. This is simply not the case. Many credit card issuers subscribe to a service that notifies them of newly filed bankruptcy cases. Don't plan on keeping a credit card after your bankruptcy filing.