Sometimes people find themselves in a situation where they can no longer afford to make their monthly bill obligations. They may have lost their job or they may have had their hours cut because of the downturn in the economy. Often a clean start will allow them to get back on their feet and get back to a normal life. While most people do not want to file bankruptcy, sometimes it is the only answer. If you are considering filing bankruptcy there are some facts and myths you need to be aware of.

Everyone you know does not have to find out that you have filed bankruptcy. In fact, if you are just an average citizen they probably will not find out unless you tell them. If you are a big corporation that will end up laying off a lot of people it may be difficult to keep it out of the media but they are not usually concerned about the average person.

You cannot wipe out all of your debts with Chapter 7. There are debts that you cannot file bankruptcy on such as student loans, child support, alimony, court judgments, and most tax obligations.

You will not lose everything that you have. Many people will refrain from filing bankruptcy because they think they will lose everything. The courts allow you to keep your possessions within reason. You can keep your house with up to $50,000 equity for one person or $100,000 for two people. You can also keep your car with up to $2,500 equity. Household furnishings and personal effects are also usually exempt unless they are security for a loan. You can also keep any money that you have in an annuity or retirement account and up to $2,500 in your checking account.

You may feel that you will never get credit again but that is not necessarily true. After bankruptcy you will have to re-establish your credit and that will probably be with a sub-prime lender who charges high interest rates. Many automobile dealers also have special lending programs for people who have filed bankruptcy. Once you have demonstrated that you can make your payments on time you credit score will go higher and credit will be easier for you to get.

You do not have to file bankruptcy on all of your debts. If you have a car that is financed and you feel that you can continue to meet the monthly payments you can exclude that debt from the bankruptcy. Also, if you have a credit card that has a low balance you might want to consider excluding that too since you may need to use it in the future.

If you are married and have individual debts you do not have to file with your spouse. Any debts that are jointly owed will probably be best if you both file but you may want to keep your spouse out of the bankruptcy so that they can have access to credit in the future.