Bankruptcy Myths

Information Presented by Franklin Bankruptcy Lawyers

Because of the social stigma connected with bankruptcy, there are many misconceptions about the subject. Many people are afraid to consider filing for bankruptcy because they believe that everyone, including friends, neighbors, and employers, will find out that they have filed and will think less of them for doing so. While it is true that a bankruptcy case becomes public record, very few people will take the time to do the research to find out whether you filed for bankruptcy. Newspapers generally do not publish the names of those who file for bankruptcy and employers are not usually notified when a case is filed unless the trustee needs information as to wage or salary status. If a person does not wish his employer to know that he has filed for bankruptcy, he can let the trustee know so that other arrangements may be made to obtain wage or salary information.

Consequences of Bankruptcy Filing

Filing for bankruptcy is not a criminal proceeding and a person who files is not in jeopardy of losing any civil or constitutional rights. It's illegal for either private or government employers to discriminate against a person regarding employment on the basis of that person having filed for bankruptcy. It's also illegal for local, state, or federal government agencies to discriminate against a person in the granting of licenses, permits, student loans, and other grants because of a bankruptcy.

Many people think that they should do everything possible to avoid bankruptcy, including liquidating all assets, such as cashing in retirement or 401K plans. Retirement funds are protected from bankruptcy. If you draw funds from these funds to pay creditors, you will be liable for IRS taxes and penalties on your withdrawals if you cannot replace them. It is always best to consult with a Franklin bankruptcy attorney about your assets in connection with any bankruptcy case.

Another misconception is that, if you are going to file for bankruptcy, you may as well run up your credit cards. This is futile as you will not get any relief for luxury goods of more $550 bought within 90 days of filing or cash advances of $875 within 70 days of filing. In fact, you could be charged with fraud for this.

To learn more about the facts pertaining to bankruptcies, speak to a Williamson County bankruptcy attorney at our firm who can inform you of all the legal aspects of a bankruptcy filing anywhere in middle Tennessee.