Here are 5 common myths that that I hear all the time from people that I consult with:

Myth #1: You Can Declare Bankruptcy by Saying It in Public
In an episode of The Office, when Michael Scott’s finances are tight, he screams, “I declare bankruptcy!” His accountant Oscar says, “Hey, I just want you to know that you can’t just say the word bankruptcy and expect anything to happen.” Michael replies, “I didn’t say it, I declared it.” Of course, Oscar is right. Filing for bankruptcy typically requires paying a fee, completing credit counseling, and submitting a bunch of legal paperwork and financial disclosures.

Myth #2: You Can Only File Bankruptcy Once
You can definitely file bankruptcy more than once in your life. In fact: You can receive a discharge from a chapter 7 bankruptcy (the kind that liquidates your assets) once every 8 years You can receive a discharge from a chapter 13 bankruptcy (the kind that creates a payment plan) every 2 years. Additionally, if you complete a chapter 7, you must wait 6 years before getting a chapter 13 discharge. And if you get a chapter 13 discharge, you must wait 4 years to obtain a chapter 7 discharge.

Myth #3: A Bankruptcy Hurts Your Spouse
If you’re married, filing bankruptcy doesn’t affect your spouse’s credit. However, if you’re struggling to pay debt that’s in both of your names, then you should file bankruptcy together. Otherwise, creditors will simply demand payment for the entire amount from the non-filing spouse.

Myth #4: You Can Go to Jail for Owing Money
No matter what anyone says—especially an aggressive debt collector—it’s not against the law to owe money. There is no such thing as debtor’s prison in the United States. Creditors can sue you, take you to court, lien your property, and garnish your wages, but they can’t send you to jail. You can only be arrested if you commit a crime, like fraud, hiding property to avoid a judgment, or refusing to pay income tax.

Myth #5: Bankruptcy is Expensive
At the Law Office of Douglas Barrett, LLC we charge a flat fee for a consumer Chapter 7 bankruptcy that usually ranges from $600 to $1,200 depending on the complexity of your case. (There is also a $335 filing fee the court will charge) Our rates are at least 40% less than what the big, impersonal law firms charge. If you don’t have the money, don’t let that stop you from calling. We can recommend easy and legal pre-bankruptcy planning that you can do to reduce your monthly expenditures and save money for the bankruptcy fees.

Don’t risk a costly mistake. Contact us today to find out about your rights under federal bankruptcy law. Once you file we can immediately stop bill collectors, lawsuits, garnishments, foreclosures and repossessions.

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