Bankruptcy isn’t a ‘get out of jail free’ card, but that doesn’t mean it’s not an incredibly useful legal and financial tool. Still, there are many misconceptions surrounding bankruptcy, and these misconceptions make it even more difficult for Americans to take advantage of this process.

The Brownsville bankruptcy lawyers of the Law Offices of Phillippe and Associates are committed to helping Texans understand and utilize the financial and legal tools available to them. To that end, we’ve gathered a list of the most common misconceptions regarding bankruptcy — and why they’re wrong.

If you’ve found yourself at that bottom of an ocean of debt, bankruptcy might just be the way out. Contact our team to determine whether or not filing for bankruptcy could be right for you.

Myth #1: Filing for Bankruptcy is Admitting Failure

One of the most common misconceptions about filing for bankruptcy is that it represents some sort of failure on the part of the filer. This is completely false.

Unfortunately, there is a common belief in the U.S. that debt is somehow a sign of poor self-control when that is not the case. Studies have shown that most people who file for bankruptcy are doing so because of forces outside of their control. These reasons could include mounting medical bills, job loss, or divorce.

Our founding fathers knew that providing Americans with a solution to unpayable debt was a key responsibility of the U.S. government, so much so that they included it explicitly in the Constitution. The idea that bankruptcy reflects poorly on the filer is one of the most precarious and unseemly myths on the subject.

Myth #2: You’ll Never Have Good Credit Again

Bankruptcy wouldn’t be very beneficial if it meant filers would never be able to restore their credit again, yet this is still one common misconception that persists.

Many think they’ll never be able to get credit again after filing for bankruptcy because they represent too much of a risk to creditors, but just about the opposite is true! Creditors may actually consider those emerging from bankruptcy a better credit risk because they will have just eliminated the majority of their obligations and won’t be able to file again for some time. 

While those emerging from bankruptcy may face higher interest rates, you should be able to start rebuilding your credit relatively soon after filing. In fact, many people find their credit returned to “good” or even “excellent” as soon as two years after filing.

It is worth noting that filing will make it more challenging for you to get a mortgage, as mortgage lenders require filers to wait two years after emerging from bankruptcy before they are eligible.

Myth #3: You Won’t Be Able to Keep Your Home

One myth about the bankruptcy process that is especially untrue in the state of Texas is that you won’t be able to keep any of your possessions once you file for bankruptcy. Texas is one of the friendliest states for bankruptcy filers, and there are many property exemptions in place.

In Texas, not only will you be able to keep your home, but there also isn’t a limit on the value of that home (although there is an acreage limit). Each member of your household who relies on a vehicle will also be allowed to keep one vehicle, in some cases even if they themselves can’t drive. There is also an exemption in place for $100,000 worth of “personal property” for filing families and $50,000 for individuals. Personal property includes “tool of a trade” or any items you use if you own a business as well.

Myth #4: You Have to Be Totally Broke to File

Bankruptcy protection isn’t just available for those with no money whatsoever. It can generally be used by anyone who has debts exceeding what they are able to pay. To find out whether or not you qualify, we recommend consulting with our experienced bankruptcy lawyer in Brownsville and referring to your state’s laws on bankruptcy.

The Law Office of Phillippe and Associates: Your Dedicated Brownsville Bankruptcy Lawyers

In reality, the misconceptions regarding bankruptcy are countless. With that said, if you’re considering filing for bankruptcy protection, we recommend doing your research and consulting with an attorney beforehand. Once you have, you may find that bankruptcy is the tool you need to move forward.

The bankruptcy process was created to give those with insurmountable debt a chance to make a fresh start. No one should have their lives ruined beyond repair because of their debt, and at the Law Offices of Phillippe and Associates, we pride ourselves on helping those struggling under an ocean of debt to keep their head above water, so to speak.


If you’re considering filing for bankruptcy, we can help. Don’t hesitate to contact our team of bankruptcy attorneys today.

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