Four Bankruptcy Myths Debunked

 Posted on February 12, 2025 in Bankruptcy and Car Equity

Sometimes, individuals who might benefit from the bankruptcy process put off filing for bankruptcy due to concerns that it might ruin their credit or that filing for bankruptcy is equivalent to admitting personal and financial failure. This is understandable, but the reality is that bankruptcy can actually be a solid way to get your finances in order and move forward with a clean slate.

Learning more about how bankruptcy really works and how it could affect you can provide certainty and peace of mind about the process. An experienced Maryland bankruptcy attorney can advise you on the myths surrounding bankruptcy, debunk these myths, and let you know whether bankruptcy is right for you.

Myth 1: You Will Lose Your Home in Bankruptcy

Bankruptcy does not have to mean that you will lose your home. In Chapter 7 bankruptcy, certain assets are exempt from the bankruptcy estate, meaning that you can keep these assets. Maryland has a homestead exemption for bankruptcy of $27,900 in 2025, meaning that the exemption protects up to this amount of equity in your primary residence from becoming part of the bankruptcy estate. In addition, exemption amounts for other types of property can be added to this amount. 

Myth 2: Filing For Bankruptcy Will Destroy Your Credit

While it is true that bankruptcy stays on a credit report for seven to 10 years, it does not necessarily destroy your credit. Many factors contribute to a credit score and, in fact, especially if your score was on the lower end before filing bankruptcy, you may see your credit score go up after bankruptcy. 

Myth 3: Only Irresponsible People File for Bankruptcy 

This is certainly not the case. Hard financial times can befall anyone, and unexpected occurrences like a divorce or medical emergency can add to the financial strain. Bankruptcy is a process that exists so debtors can move past overwhelming debt and move forward. 

Myth 4: Filing for Bankruptcy is Difficult

While bankruptcy is a legally complex process, the attorney representing you will explain it to you and handle the technical and legal aspects. Your attorney will also advise you as to your eligibility to file for bankruptcy and which type of bankruptcy is best for you, and work on the goal of ensuring that you can keep as many assets as possible.

Contact a Greenbelt, MD Bankruptcy Attorney

Whether you have decided to file bankruptcy or have some questions about what doing so could mean for you, the experienced Bowie, MD bankruptcy attorney at The Law Office of Donald L. Bell is here to offer hands-on guidance. With over 20 years of experience, attorney Donald Bell has the skills and experience to guide you through bankruptcy from filing through to discharge. Call the office at 301-614-0535 for a complimentary consultation.