Cunningham, Chernicoff & Warshawsky, P.C.

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As of May 29, 2020, Dauphin County, where our office is located, has moved from Red to Yellow status. Our office will re-open on June 1, 2020. Until further notice, Stay Safe Guidelines will be followed, including safe social distancing (6 feet), cleaning after each client and the wearing of masks by employees and clients at all times while in our office. People who are ill and those without masks will not be permitted entry into our office.

What you need to know about common bankruptcy myths

When you are in the middle of a financial crisis in the Harrisburg area, finding your way out might seem impossible. Creditors are calling your phone nonstop and mailing demand letters to your home. However, you do have options, and one of them may be bankruptcy.

Due to common misconceptions, many people make mistakes during the bankruptcy process. To avoid this, take some time to review the following bankruptcy myths so you make the right decisions. 

1. Maxing out the cards and accounts is OK 

Many people believe they can open new accounts and spend with abandon because bankruptcy wipes everything away. The courts use many factors to determine if someone’s case qualifies for bankruptcy, and one of them involves scrutiny of financial behavior before filing for bankruptcy. Maxing out the credit cards and acquiring new accounts may be a criminal offense and could lead to case dismissal and other unfavorable consequences. 

2. Bankruptcy clears all debts

A bankruptcy typically results in the discharge of consumer debts such as credit card debt and other secured and unsecured loans. However, you cannot include certain other expenses. For example, if you owe back child support or alimony, you will still have to pay the full amount. If you owe taxes, these are not likely to be dischargeable, either. Unless you can prove extreme hardship, you must pay your student loans in full, as well. Finally, you cannot include any amounts you owe because the court has ordered you to make restitution or because of financial penalties for fraud.

3. You will lose everything 

Contrary to popular belief, filing for bankruptcy does not mean you will lose all assets. Bankruptcy does allow filers to use exemptions to retain possession of some assets. It all depends on your financial circumstances, the type of bankruptcy, the value of the assets and debts owed. 

Do not let misinformation, fear or embarrassment keep you from using bankruptcy to gain control of your finances. If you have concerns about it or would like to know if you qualify, you may want to speak with an attorney for guidance.