With COVID-19 destroying the economy, scores of retailers have filed bankruptcy in order to get relief from their creditors. Last last year, Congress enacted a new subchapter of the bankruptcy code to help smaller businesses get relief at a lower cost and more quickly. Corporations of all sizes have used bankruptcy as a survival tool for generations. They did not give it a second thought. There is not stigma when a company does this in order to survive. (Local grocer Winn-Dixie, and many major airlines, are still around because of their bankruptcy filings.)
However, for individuals, the “stigma” of having gone bankrupt has stuck around a little longer. This seems to be changing now that people realize that bankruptcy is a tool to survive economic downturns. I just got off the phone with a potential client who called to say that a credit union had sued her. She called asking what she could do about it. She started her call by saying, “I do not want to file bankruptcy.” I asked her why not. She said that she would lose all of her property, ruin her credit, ruin her reputation and lose her job if she filed bankruptcy. I spent 45 minutes with her on the phone. She retained me to handled her Chapter 7 bankruptcy case. I dispelled the myths of bankruptcy and I made her laugh–a lot–which she said took away some of her stress from the collection calls, letters and lawsuit.
MYTH NO. 1: I WILL LOSE MY PROPERTY IF I GO BANKRUPT