Bankruptcy is a legal status of a person or other entity that cannot repay the debts it owes to creditors. In other words, bankruptcy is a federal court procedure that helps consumers and businesses get rid of their debts and repay their creditors. If you can prove that you are entitled to it, the bankruptcy court will protect you during your bankruptcy proceeding. However, there are several myths surrounding bankruptcy procedures that might keep people in financial distress from considering bankruptcy as a possible option:

1. "I will lose everything". Not true. While the bankruptcy laws vary from state to state, every state has exemptions that protect certain kinds of assets, such as your house, your car (up to a certain value), money in qualified retirement plans, household goods and clothing. Some people think they have to give up everything they have and they will have to start over again, but most people will pass through a bankruptcy case and keep all or most of their assets. If you have a mortgage or a car loan, you can keep those as long as you keep making the payments.
2. "All my debts will be wiped out in Chapter 7 bankruptcy". False. Certain types of debts cannot be discharged, or erased, like child support and alimony, student loans, restitution for a criminal act and debts incurred as the result of fraud.
3. "I will never get credit again". Quite the contrary, it won't be long before you're getting credit card offers again, only they will be from subprime lenders that will charge higher interest rates, or in the form of secured credit cards (which require a deposit to the bank).
4. "If you're married, both spouses have to file for bankruptcy". Not true. It's not uncommon for one spouse to have a significant amount of debt in their name only. In such a case, it is possible for one spouse to file for bankruptcy individually.
5. “People who file for bankruptcy are financially irresponsible". Far from true. While some people fall in financial distress for being financially irresponsible, it is far more likely that people run into very serious personal problems, such as losing their job, going through a divorce, or suffering a serious illness, which imposes upon them an unmanageable financial load.”
6. "Whatever you spend right before bankruptcy, you won't have to pay back". Completely false. Some people assume they can max out their credit cards right before filing bankruptcy and then have those debts discharged, but the Courts consider that as fraud and therefore will not be discharged.
7. “All bankruptcy options are essentially the same". Not true. Chapter 7 and Chapter 13 are very different. Many individuals file under Chapter 7, which usually allows them to erase most of their debt in a matter of months. Chapter 7 has a higher success rate and is cheaper to file than Chapter 13, which tends to take a lot longer because it requires individuals to use their disposable income to repay a percentage of their debt over a five year period.
8. “I live too far away from a lawyer to file bankruptcy”.  Bankruptcy is a federal program and is filed based on where you live.  The Middle District of Alabama covers Autauga, Barbour, Bullock, Butler, Chambers, Chilton, Coffee, Coosa, Covington, Crenshaw, Dale, Elmore, Geneva, Henry, Houston, Lee, Lowndes, Macon, Montgomery, Pike, Randolph, Russell, and Tallapoosa counties.  The Southern Division of the Middle District of Alabama includes Coffee, Dale, Geneva, Henry, and Houston counties.  All cases filed in the Southern Division are held in Dothan, which is a central location.  

Whether you qualify for a Chapter 7 or Chapter 13, and whether filing for bankruptcy is a viable option for you, depends on your particular situation. That is why it is so important for people under financial distress, whatever circumstances may be that led to it, to consult with a bankruptcy attorney before making a decision.