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Ten Misconceptions about : Bankruptcy By JUSTIN DION
1. Bankruptcy is a process mainly used by people who are reckless and overspend on luxury items. Reality: the majority of those who file are honest, hardworking people who have fallen on hard times due to no fault of their own. |
| 2. I can only get rid of credit-card debt in a bankruptcy. Reality: Most debts can be discharged, including credit cards, medical bills, utility bills, personal loans, foreclosures, repossessions, and family debts. |
| 3. If I file bankruptcy, I will have to pay a large tax penalty for the debt I discharge. Reality: You will not be taxed on the debt discharged in a bankruptcy. |
| 4. Once I file bankruptcy, I will carry a stigma around forever. Reality: There is no longer a bankruptcy stigma; people can continue to live their lives essentially in the same manner they had before bankruptcy. |
5. I will have to go to court if I file bankruptcy. Reality: A vast majority of bankruptcy cases conclude without the debtor ever going to court. |
| 6. Bankruptcy is a long proceeding that takes years. Reality: Most bankruptcy cases conclude in a mere few months. |
| 7. Income taxes can never be discharged in a bankruptcy. Reality: Many income-tax debts that have been properly filed and are at least three years old can in fact be discharged in bankruptcy. |
| 8. I will lose my house, car, and assets if I file bankruptcy. Reality: Most people keep all of their assets, including their house, car, bank accounts, retirement accounts, clothing, jewelry, furniture, and household appliances. |
| 9. Bankruptcy laws changed a few years ago, and now everyone must repay their debts. Reality: Almost everyone who qualified for bankruptcy a few years ago still qualifies today and can still discharge their debts without repayment. |
10. I will never be able to get credit again. Reality: If responsible debt repayment is evidenced after filing bankruptcy, most people are able to get some unsecured credit immediately, and secured credit for significant purchases within a year or two. |
 Justin H. Dion is an associate at Bacon Wilson, P.C., where he concentrates on business and personal bankruptcy, real estate, and general business matters; (413) 781-0560; jdion@baconwilson.com
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