Top 5 Myths About Bankruptcy (and the Truth Behind Them)

For many people, the word “bankruptcy” immediately sparks fear, embarrassment, or guilt, emotions often fueled by myths and misinformation. But here’s the truth: bankruptcy isn’t the end. It’s a legal protection designed to help people rebuild when life hits hard.

At Royes Law LLC, we talk with clients every week who feel ashamed or anxious about filing, often because they’ve heard things that simply aren’t true. Let’s set the record straight.

Myth #1: “Filing for bankruptcy means I failed.”

The truth: Bankruptcy doesn’t mean you’ve failed, it means you’re taking control.

Many people assume that filing for bankruptcy is a personal failure. In reality, it’s a financial decision, not a moral one. People file for all kinds of reasons, medical bills, job loss, divorce, inflation, or business downturns, not because they were irresponsible.

Bankruptcy laws exist to give honest people a second chance. Even major corporations, professional athletes, and business owners have used bankruptcy to recover and rebuild. The law is there to help you get back on your feet, not punish you.

Filing for bankruptcy isn’t giving up. It’s standing up and saying, ‘I’m ready to start over.

Myth #2: “I’ll lose everything if I file.”

The truth: Most people who file for Chapter 7 keep everything they own.

This is one of the biggest misconceptions about bankruptcy and it’s completely false for the vast majority of cases. Bankruptcy laws include exemptions that allow you to keep essential property such as your home, car, clothing, and household goods.

At Royes Law LLC, most of our Chapter 7 clients don’t lose any property at all. You can still live your life, work your job, and provide for your family while clearing your debt.

Myth #3: “Bankruptcy will ruin my credit forever.”

The truth: Bankruptcy gives you the chance to rebuild your credit faster than you think.

While your credit score may drop initially, it can improve much sooner than people realize. In fact, many clients begin rebuilding within months of discharge. By using credit wisely (like a secured card or small loan) and paying all bills on time, it’s common to see credit scores rise within a year or two.

The reality? Bankruptcy wipes away the very debts that are dragging your credit down. It’s not the end of your credit, it’s the beginning of a clean slate.

Myth #4: “Everyone will know I filed.”

The truth: Your bankruptcy is a legal filing but it’s not publicized.

While bankruptcy cases are technically public records, they’re not announced or broadcast anywhere. Unless someone specifically searches for your name in the court database, no one will ever know you filed.

Employers, friends, and family won’t be notified. The only people who are automatically informed are your creditors, the court, and your attorney.

Your privacy matters and Royes Law LLC handles all filings with complete discretion.

Myth #5: “I’ll never be able to buy a house or get credit again.”

The truth: You can absolutely rebuild your financial life and many people do.

Bankruptcy doesn’t prevent you from qualifying for future credit. In fact, many clients are approved for car loans, credit cards, or even mortgages within a few years after filing.

Lenders understand that after bankruptcy, you’re actually a lower credit risk because you’ve eliminated your unsecured debt. With patience, responsible budgeting, and smart credit use, financial stability and even homeownership is completely achievable again.

The Real Truth About Bankruptcy

Bankruptcy isn’t a punishment, it’s protection. It’s part of the law because sometimes, even responsible people need help getting back on their feet.

At Royes Law LLC, we believe in removing the stigma and replacing it with understanding. If you’re overwhelmed by debt, filing for Chapter 7 might be one of the smartest financial decisions you can make.

We take the time to explain your rights, walk you through every step, and make sure you understand exactly how bankruptcy can work for you. You deserve peace of mind, not pressure or judgment.

Take the First Step Toward a Fresh Start

If you’re struggling with debt and unsure whether bankruptcy is right for you, let’s talk.

Contact Royes Law LLC today to schedule your consultation and get clear, honest answers about your options. Your financial reset could be just one decision away.