Myths about Bankruptcy and Debt Collection.

Many people have unfounded beliefs about what creditors can do to collect and how bankruptcy will effect them, some those myths which are clearly Not True and the real answers are listed here:

1. If I file bankruptcy, I can’t get any credit for 7 years.

Not true. First Bankruptcy is listed on a credit report, but people can recover from bankruptcy long before the bankruptcy drops off the credit report.  There are multiple things that can be done by a person after the bankruptcy so he/she can increase his/her credit score as quickly as possible, such as obtaining the right kind of loans from banks after bankruptcy and our staff will show you how this can be done.  For example, many of our clients have bought or refinanced homes 2 years after their bankruptcy was completed.  In some cases, our clients credit was so bad before they filed that their credit score was higher the day after they finished their bankruptcy case than it was before they filed.

2.   If I file a chapter 13 bankruptcy case, I will have to pay all my debt back and I can’t afford to do that.

Not true. Chapter 13 allows a person to person to reorganize his/her debt (not consolidate the debt).  Consolidation is done by making a loan to pay off several loans and put all those loans in one payment, generally over a longer period to lower the payment, but many times the overall cost is too large.  Under chapter 13, a reorganization allows most debtors to pay what they can afford to pay, reducing car loans by lowering the interest rate and in some cases, only paying the value of the car, not the full amount of the debt.  Most debtors are only required to pay a small portion of their unsecured debt (debt with no collateral) and in many cases, are not required to pay any of the unsecured debt.  Thus, the chapter 13 plan payment is normally much lower than the total monthly payments a person had before filing the case.

3.  A creditor told me that if I don’t make a payment this Friday, they will garnish my next pay check.

Not true in most instances. This is a common threat by creditors and collection agencies even though the company has not filed suit against the debtor.  Except for child support, alimony, tax debt and student loan debt, a creditor must file suit against a person and obtain a judgment before that creditor can garnish a person’s pay.   In Mississippi, if you are sued in Justice Court, someone in your home must be given a copy of the summons unless no one is home, then the summons can be posted on your door.  In this type of suit a court date is set that you must attend if you believe that you are being sued for more than you owe.  If you don’t appear, then a judgment will be entered against you.  If you are sued in Circuit or County Court, the summons will state that you must file a response within 30 days.  If you do not do that then the judgment will be entered without a court date.

4.  A creditor cannot sue me or garnish my pay as long as I am making some payments on the debt.

Not true. The only way a creditor is precluded from filing suit and ultimately garnishing a person’s pay is if the creditor has agreed in writing to accept a certain monthly or weekly payment and the person is making the payments as agreed.   We have had people that thought that as long as they paid the hospital $10.00 a month on a $50,000.00 hospital bill, then the hospital could not sue them.  At $10.00 per month, the debt would not be paid off for over 416 years.    Clearly, the hospital would not be stopped from filing suit because a person was making these payments.

5.  If I file bankruptcy, my husband’s or my wife’s credit will be hurt.

Not true. Each person’s credit score is based upon his or her loan payment history.  Thus, one spouse filing bankruptcy will not effect the other spouse’s credit score.  Now, if there is a co-signed debt that both the husband and wife owe and one of them files a bankruptcy case and stops making payments on that debt, then the failure to timely pay the debt will effect the non-filing spouse’s credit score.   However, if the non-filing spouse continues to make all debt that he or she owes timely, then that person’s credit will not be effected.

6.  If I file bankruptcy, I will lose the things I own, such as my home, car or household goods.

Not true in most instances. As long as a person is able to catch up any payments in arrears and pay the secured loans, such as a car loan or house mortgage, then that person can keep his or her home and/or car even though he or she filed a chapter 7 bankruptcy.  Under chapter 13, the debtor can keep the home and/or auto even if he/she was behind on his/her loans prior to filing provided the person keeps up the insurance on the home or car and makes the reorganized payments which in most cases is much lower than the payments were before filing the case.

We have heard clients say, I know a person that filed bankruptcy and lost his car or home because of the bankruptcy filing.  That person did not lose the car or home because he/she filed a bankruptcy case.  He or she lost the car or home because they did not continue to make the monthly payments required to keep these items and had that person not filed bankruptcy, the payments on all his/her debt would have been more than the payments were after bankruptcy.

7. Everyone will know that I have filed for bankruptcy.

Except in a very few places in Mississippi (such as Pascagoula and Meridian), the local newspapers do not publish a list the people that filed bankruptcy recently.  However, a bankruptcy filing is a public record.   Thus, some times newspapers do print stories about prominent persons or a major corporations that filed.   While it’s true that your bankruptcy is a matter of public record, the number of filings is so massive, that unless someone is specifically trying to track down information on you, there is almost no likelihood that anyone will even know you filed. However, telling someone that someone else filed bankruptcy is good gossip.  Thus, if you don’t want everyone you know to know you filed bankruptcy, you need to keep the information to yourself.

8.  If I don’t pay a pay day loan, I can go to jail for writing a bad check.

Not True. A pay day loan company agrees to hold the check for two weeks or more.  This is a promise to pay in the future and not a violation of Mississippi bad check laws. If you have been threatened with criminal prosecution, you may have a claim against the company for malicious prosecution.



  1. dave
    Posted March 5, 2015 at 6:54 pm | Permalink

    Does the doctrine of necessaries apply in Mississippi if I tell the hospital up front that I do not approve and will not pay her medical (drug treatment) expenses at an expensive private treatment center versus the economical one I had arranged?

  2. robert
    Posted March 5, 2015 at 8:40 pm | Permalink


    There was a statute in Mississippi that stated at a husband was responsible to pay necessary expenses of his wife. This statute held to be unconstitutional in that the statute only required that the husband be responsible for the wife’s debts, but the wife was not responsible for the husband’s debts. Govan v. Medical Credit Servs., Inc., 621 So. 2d 928 (Miss. 1993) However, if a husband or wife signs documents with hospital or medical provider in which he/she agrees to be responsible for the treatment being rendered during that visit or hospital stay, then the spouse will be responsible for the debts of the other.

    Mississippi courts have held that a parent is responsible for the necessary expenses of his/her child. Thus, if either parent seeks medical treatment for their child, both parents are liable for the medical expenses. McLain v. W. Side Bone & Joint Ctr., 656 So. 2d 119, 120 (Miss. 1995)

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