Myth: You cannot file bankruptcy for protection from medical debt.

Fact: This myth is widespread, and even my own mother believed that her brother couldn’t qualify for bankruptcy because he had a lot of medical debt. In reality, you can get relief from medical debt under both Chapter 7 and Chapter 13 bankruptcy. Chapter 7 can liquidate or completely eliminate medical debt, while Chapter 13 reorganizes it, potentially removing late fees and other penalties and packaging the debt into a manageable monthly payment.

Myth: I’m going to lose everything if I file for bankruptcy.

Fact: Your retirement accounts, wedding ring, car, and home are protected. If you are concerned about losing other assets, such as a four-wheeler or another type of recreational vehicle, this generally only happens if you do not want to continue making payments on it. Most debts can be “reaffirmed” through the bankruptcy process, meaning you agree to continue honoring the original terms of the loan.

Myth: Filing for bankruptcy will ruin your credit forever.

Fact: While bankruptcy will impact your credit score, it does not ruin your credit forever. Most people see their credit scores start to improve within one to two years after filing. Additionally, you can take steps to rebuild your credit after bankruptcy by making timely payments on any reaffirmed debts and avoiding taking on new high-interest debt.

Myth: You can only file for bankruptcy once.

Fact: You can file for bankruptcy more than once, but there are time limits between filings. For example, if you received a discharge under Chapter 7, you must wait eight years before you can file for Chapter 7 again. The waiting periods vary depending on the type of bankruptcy filed previously and the type you are filing now.

Myth: Only financially irresponsible people file for bankruptcy.

Fact: Many people file for bankruptcy due to circumstances beyond their control, such as job loss, medical emergencies, or divorce. Filing for bankruptcy is often a responsible way to manage overwhelming debt and get a fresh start.

Myth: You will never be able to get a loan or mortgage after filing for bankruptcy.

Fact: While it may be more challenging to get a loan or mortgage immediately after bankruptcy, it is not impossible. Many lenders specialize in working with individuals who have filed for bankruptcy, and with time and effort to rebuild your credit, you can qualify for loans and mortgages in the future.