Bankruptcy Myths You Should Know

While considering filing for bankruptcy, you have probably come across some common bankruptcy myths. They can be pretty confusing – and some of the answers you find online make things even less clear. Here are seven of the most common myths, debunked.

Everyone Will Know I Filed Bankruptcy

False. Unless you’re a public figure, there’s a good chance the only people who will find out are your creditors and anyone you choose to tell. There’s no public announcement list – bankruptcy filings are technically public court records, but in practice they’re rarely searched by anyone outside the process.

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I Will Never Be Able To Buy Anything Again

False. There are no laws preventing you from buying a house, a car, or anything else after receiving a bankruptcy discharge. In fact, depending on where your credit score was before you filed, bankruptcy can sometimes improve it by eliminating the debt dragging it down. You may want to wait before financing a major purchase, but it is absolutely possible – and common – to do so within a few years of discharge.

I Will Never Get Credit Again

False. Most people start receiving credit card offers while still in bankruptcy. That said, we do not recommend applying for new credit while still under bankruptcy protection. Start small after discharge – a secured credit card used responsibly is one of the fastest ways to rebuild your score.

You Get To Choose Which Bills To List

False. By law, you are required to list everyone you owe money to – no exceptions, regardless of what you may have heard from others who filed.

Filing Bankruptcy Will Hurt My Credit For 10 Years

Partially true – but often overstated. Bankruptcy does stay on your credit report for 10 years, but its negative impact typically fades significantly after the first two to three years, especially if you’re actively rebuilding credit in the meantime. Many people see meaningful credit score improvements within 12 to 24 months of discharge.

If I’m Married We Both Have To File

False. If you are married, you can file without your spouse. However, if you have joint debts, your spouse will still be responsible for those debts even after your discharge.

There are cases where an attorney might recommend filing jointly. When you sit down and review everything together, it often makes financial sense – filing jointly means one filing fee, lower attorney fees overall, and fewer credit counseling costs. If you file alone and your spouse later realizes they need to file too, you’ll both end up paying double the fees.

I Can’t File Bankruptcy Again

False. Depending on which chapter you filed previously and which chapter you need now, you can file again — though a waiting period applies between filings. Speak with a bankruptcy attorney about your specific circumstances to determine the right next steps.

The Bottom Line

Bankruptcy is a legal tool, not a life sentence. Understanding what it actually does – and doesn’t – do to your finances is the first step to making a clear-headed decision. If you’re struggling with debt, also read our guides on how to get out of debt and managing debt wisely for alternatives worth considering before you file.