Myth: Bankruptcy relief is no longer available under the new law
This is just silly. The law wouldn’t be there if it didn’t serve a purpose. Almost all of the relief formerly available through bankruptcy survives in today’s bankruptcy code. It is a little more involved and may be more expensive, but it is still the quickest and single most effective way to make a fresh financial start.
Myth: You can’t file bankruptcy if you have a job
The new “means test” is supposed to divert some filers who make more than the median income for households of their size in their state of residence to Chapter 13. The only way to fund a Chapter 13 plan is to HAVE a job so this is just ridiculous.
Myth: Medical bills and credit cards can’t be discharged in bankruptcy
Rubbish. Debt collectors are known to push this mis-information on the unsuspecting consumer. The truth is that almost all unsecured contract debt, like credit cards, personal loans, and medical bills, remain dischargeable in bankruptcy.
Myth: Chapter 13 plans require repayment in full of debt
Chapter 13 plans range from plans that pay general unsecured creditors nothing to plans that pay 100%, with every variation calculable in between. How much you must pay in 13 is driven by the ratio between your disposable income, the value of your non-exempt assets, and the total of priority debts you have.
Myth: People who file bankruptcy can’t get credit for 10 years
This is nonsense. People in a Chapter 13 bankruptcy can borrow money during the case and people who’ve filed Chapter 7 get inundated with credit card offers after they get their discharge. While this is not credit at the best rates, it is available nonetheless. This myth probably got its start in the fact that the Fair Credit Reporting Act allows the reporting of a bankruptcy filing for 10 years.