7 Misconceptions About Bankruptcy and What You Need to Know

Filing for bankruptcy can be an uncomfortable thought. There’s a certain negative stigma that goes along with it, and for this reason, many people struggle with the decision to file more than they need to. Even though bankruptcy might not seem like the best financial decision, there are many benefits that you may not be aware of. Let’s take a look and clear up seven of the most common misconceptions about bankruptcy.

1. You Don’t Qualify for Bankruptcy

Many people don’t file for bankruptcy because they believe they will not qualify for it. That’s not true. Anyone can file for bankruptcy; however, the steps required to file will vary from case to case.

If you file for a Chapter 7, then a ‘means test’ will be conducted. A means test is used to determine a person’s financial means as they file for bankruptcy. The test takes into consideration your income and whether your income is sufficient to handle your debts.

If you fail the means test, you can always file for Chapter 13, which will allow you to pay back what you owe over a specific time period.

2. Filing for Bankruptcy Means You’re A Failure

It’s easy to feel like you’ve failed when you file bankruptcy. This couldn’t be further from the truth. Filing for bankruptcy means you’ve taken responsibility for your life and your financial decisions. Instead of feeling embarrassed or ashamed, feel proud that you’re taking steps toward a better financial future.

Many people worry about others finding out about their bankruptcy. Remember, filing for bankruptcy is your business and taking care of your financial health is more important than what others think about you. Don’t let how others feel about bankruptcy prevent you from taking control of your own financial situation.

3. You’ll Have Everything Taken Away

No one is going to come into your home after you’ve filed for bankruptcy and take all of your belongings unless you are surrendering that property. There are exemptions based on the value of certain things in your home. The items exempted will be determined by the state of Arkansas.

4. All of Your Debts Will Be Cleared

Even though Chapter 7 and Chapter 13 bankruptcy will help a person clear of most of the debt they owe, not everything will be cleared.

For example, a bankruptcy filing will not clear student loan debt.

5. You Won’t Ever Be Able to Get Credit Again

Not true.

You might be afraid to file for bankruptcy because you think you won’t ever be able to get credit again. Although a bankruptcy will appear on your credit report for up to 10 years, this shouldn’t stop you from seeking credit. Click here for more information on our 7 Steps to 720 program.

It’s true that a bankruptcy may hinder your application for credit at certain institutions, but you shouldn’t allow this to stop you from trying. There are certain credit cards you can get for people who have poor credit. Then you can build it up from there.

Proper planning is also key when establishing new credit and moving your financial situation forward. If you speak to a professional before you make any decisions, they will help you choose the best path for your specific situation.

6. You Cannot File for Bankruptcy If You’re Married

You may think you can’t file for bankruptcy because you’re married, but the truth is, you can. Marriage has nothing to do with your ability to file for bankruptcy and shouldn’t stop you from moving forward.

If you’re married, you can file by yourself, or you and your spouse can file together. If you have a lot of personal debt, then it may be a good idea to file by yourself. On the other hand, if you have a lot of joint accounts, then filing together may be the best course of action.

7. You May Go to Jail

Some people hesitate to file bankruptcy because they believe they may end up end jail. If everything you claim during your filing is truthful, then there is nothing to worry about on your part.

Be honest and you won’t go to jail. There is no such thing as debtor’s prison.


Bankruptcy shouldn’t be viewed as a “bad” thing. If you’re contemplating it, then it might be the best decision you can make for you and your family to get a fresh start. Mr. Crawley can inform you of your options and help you decide whether filing for bankruptcy is the right decision based on your situation during a free initial consultation.

You don’t have to be ashamed about filing for bankruptcy if it’s what you need to do to get your life back on track. Call us today to set up a time to speak with Mr. Crawley in person or over the phone, so you can make the right decision and preserve your credit rather than ruin it.


Crawley Law Firm, PA

Customer Reviews

Mark N 07/22/2021

Mr. Crawley works quickly and it is so appreciated. I’m just so thankful and blessed to have you guys in my corner.

Anna J. 6/01/2021

Mr. Crawley and his staff always answer questions in ways you can understand. They get back to you quickly. They are all so nice and professional.

R Thomas 5/8/2021

Excellent service. Even after completion of our service they were always readily available to answer questions and help even after the fact. Office service is superb.

Dean J. 2/23/2021

I filed for bankruptcy with Crawley Law Firm, PA and they did an outstanding job of guiding me through the process. They were with me every step of the way.


Thank you very much for the generous time you gave me Friday and for the forms. I really appreciated the sincerity, understanding, and compassion you demonstrated.

Glenn H. 11/2020

They treated me respectful, professionally, and did not look down on me. I'd recommend anyone to go to them. It went smooth and well.

Matt M 08/2020

Michael Crawley is most helpful and very professional. He is informative and gets the job done.

M Cooper

Thank you so much for all your help! Never thought in my wildest dreams (don’t remember ever having a nightmare) that I would be having to do this. But sometimes life throws us a curve. And mine has come so late in my earthly life. I needed someone to help me feel comfortable when I really was trembling inside because I had never gone through anything like this before. Y’all have done that for me. Thanks again.


I was being sued due to a car loan. Michael and his team helped explain and get me information on my best options to file bankruptcy. I am thankful for all their time and effort they put into my case.


Mr. Crawley did an excellent job helping me to get all my bills consolidated in a Ch 13 bankruptcy. I was so worried, but he was reassuring and told me not to worry. He told me that I would be out of debt in a couple of years and I could reestablish my credit at that time. I highly recommend him!