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Which Chapter 7 bankruptcy myths are false?

On Behalf of | Jan 20, 2015 | Chapter 7

There are a number of myths that surround Chapter 7 bankruptcy. Whether they seem positive or negative, false myths can be harmful to those who are trying to decide if bankruptcy is right for them because false information can be misleading. In order for a person to make a well-informed decision, they should know which myths about Chapter 7 bankruptcy are true and which are false.

When personal bankruptcy laws changed in 2005, a number of unconfirmed rumors began to spread. The Government Publishing Office posted all revisions to the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) to showcase just what about personal bankruptcy had changed, but certain myths still gained footing. One example is the idea that Chapter 7 bankruptcy debt erasure only applies to certain areas of personal debt, leaving the filer to shoulder whatever debts are left. However, that is entirely untrue. With the exception of certain debts such as college loans, filing for Chapter 7 bankruptcy will allow a person to start over with a clean slate.

Another popular myth is that a person may not be able to file for Chapter 7 bankruptcy at all, but will instead be pushed into Chapter 13 bankruptcy. Due to the fact that Chapter 13 bankruptcy is designed to be used by people who can pay off their debts with the additional help of a payment plan, it cannot be forced on anyone. Filers may also believe that they can’t discharge their credit card if they file for Chapter 7 bankruptcy now, but this is untrue as well.

Chapter 7 bankruptcy rules have not changed a good deal in spite of the law revisions, making it a solid option for potential filers to consider. This is especially true for those who have unmanageable debt that they can’t get back under control with a payment plan.


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The Law Office of Kim Covington is a debt relief agency, and I have helped families, individuals and small businesses, file for bankruptcy relief under the U.S. Bankruptcy Code, for over 22 years.