February 23, 2018

Bankruptcy Myths Debunked: Part 2

There are many persistent myths and misconceptions surrounding bankruptcy.  In an earlier post, I addressed 5 such myths and misconceptions.  This post will discuss an additional five myths and misconceptions that may surround bankruptcy.

MYTH 1:  If You Are Married, You Must File Bankruptcy With Your Spouse:  This myth is untrue.  An individual spouse may choose to file by himself or herself, without bringing the other spouse into the bankruptcy filing.  Often, if there is joint debt in the marriage, it will make sense to file for both husband and wife (a joint bankruptcy).  But there are reasons for only one spouse to want to file bankruptcy and not include the other spouse; for example, the spouse filing bankruptcy may have incurred the debt prior to the marriage, the other spouse may have pending legal claims that he or she does not want to get wrapped up in a bankruptcy, the other spouse has no debt to speak of, and so on.

MYTH 2: I Will Lose All My Property If I File For Bankruptcy: This is completely untrue.  In fact, in the vast majority of bankruptcies, consumers will loose no property.  This is largely due to bankruptcy exemptions, or laws that protect your property when you file for bankruptcy.  In Oregon, for example, we have many exemptions that will protect most, if not all, property owned by a consumer.  There are exemptions that help protect household goods, vehicles, real estate, tools, and so on.

MYTH 3: You Can Pick And Choose Who You File Bankruptcy On:  This is also untrue.  When you file bankruptcy, you must list all of your creditors, including any family members, friends, doctors, and so on.   In fact, you are signing under penalty of perjury in your bankruptcy petition that you have listed all known creditors.  Now, after the bankruptcy you may voluntarily pay any creditor that was discharged in the bankruptcy.

MYTH 4: Your Immigration Status Will Be Jeopardized:  This is not true.  Bankruptcy is a federal procedure to discharge debt, not a crime.  Merely filing bankruptcy will not affect an immigrant’s ability to obtain citizenship or maintain permanent residency.

MYTH 5: It Is OK To Max Out Credit Cards On The Eve Of  Bankruptcy:  This is absolutely false!  If there is a clear way to get in trouble, this is it!  Creditors can file an objection in a consumer’s bankruptcy case to make this debt non-dischargeable, or, in other words, the debt may survive the bankruptcy.  In egregious cases, creditors (including the United States Trustee) can move the court to deny a bankruptcy discharge altogether based on such activity, meaning all the debt will come back on the consumer.

This wraps up Part 2 of “Bankruptcy Myths Debunked.”  If you have any questions relating to this material or how bankruptcy may improve your financial situation, please call today to schedule your free in-office bankruptcy consultation in Eugene.


Pursuant to 11 U.S. Code § 528: "I am a debt relief agency. I help people file for bankruptcy relief under the Bankruptcy Code."

CAUTION: This website is to provide visitors with basic information about my law office, and information about how to contact me. Every situation is different, and no information on this website is legal advice on any specific question. You should not act on any of the information without first conferring with an attorney licensed in your jurisdiction. No attorney-client relationship or privilege is formed by visiting this site or by unsolicited email. Therefore, initial emails should not contain any confidential information. I may already represent parties adverse to you and cannot advise or represent you until we check for conflicts. I am licensed only in Oregon and offer my services only to those doing business in Oregon, unless I am associated with local counsel in accordance with other states' laws. The applicable laws may have changed after the information on this website was published. While effort is made to keep the information current, you should not presume that all information is up to date. You must confer with an attorney to be sure you have current information.