MY BILLS MUST BE DELINQUENT, THE CREDITORS MUST BE CALLING, AND I MUST BE BROKE TO FILE.
This is FALSE. If your bills are beginning to create anxiety and you see that you will not have the ability to pay them in the future, you do not have to wait until it is you are seriously delinquent and the creditors are chomping at your ankles. With a proper consultation with an attorney and good planning, you can avoid the stress of the lawsuits, judgments and wage garnishments that creditors will use to collect. You will also be able to protect your assets and avoid liquidating them trying to pay your bills.

I WILL LOSE MY HOME IF YOU FILE.
This is FALSE. If you have a mortgage in place and can afford to pay that mortgage, there is no reason the bank will try to take your home. If you have equity in your home in excess of the mortgage, each state has different levels of protection for homes. New Jersey doesn’t have a state exemption but you can elect the federal exemption which is $20,200 of equity per homeowner ($40,400 of equity for married couples).

MY CREDIT WILL BE RUINED IF I FILE AND MY CREDIT SCORE WILL PLUMMET.
This is FALSE. If you are in a late on your bills or have your credit cards maxed out, your credit score probably has already been dragged down significantly. The exact measure of a credit score is unknown, but just having too much credit outstanding (your debt to credit ratio) even if current can reduce your credit score.
In fact, after a bankruptcy discharge you are a much better credit risk than just about anyone else, creditors will consider the following:

-You have a clean financial slate.
-you most likely have little or no remaining unsecured debt
-you have just completed two course – one on credit counseling and the second on financial management
-you have just put together a household budget and have used the process to strip the unaffordable debt from your budget
-you understand clearly the implications of poor credit management
-you can’t file another Chapter 7 for 8 years

EMPLOYERS WON’T HIRE ME AND I WON’T BE ABLE TO RENT AN APARTMENT IF I FILE.
This is FALSE. Employers do not like to have employees that will be distracted by creditors and their collection tactics at the workplace or at home, because then the employee is unfocused and anxious about their financial situation. Neither does the employer want to deal with the extra accounting caused by wage executions. Furthermore, landlords prefer tenants who can use their salary to pay rent, not those paying creditors instead.

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Among different debt options to get your finances back on track is bankruptcy, a pretty drastic measure that can sometimes do more harm than good. That explains why in many cases filing bankruptcy is considered a last resort to give a debtor a “fresh start”. However, due to the New Bankruptcy Law that went into effect October 17, 2005, declaring yourself bankrupt has become more expensive and complex than what it used to be. What’s even worse: due to this new regulation, less filers will actually be able to get a “fresh start”.
Chapter 7: most of the debt is cancelled, giving the debtor a “fresh start”. A consumer’s assets (minus his exempt property) are liquidated and given to creditors. Chapter 13: the debtor is placed on a repayment plan for up to five years. Less People Will Be Able To File Under Chapter 7 This means less people will get a “fresh start” and more people will be placed on a repayment plan. The new Law specifies that if a consumer has an income higher than the median for his State, he’ll need to file under Chapter 13 instead of 7. Thus, instead of cancelling most of his debts, a debtor will be assigned to a repayment plan. Many Consumers Will Need To Live With Less Money The court used to decide what were considered basic living expenses to calculate a debtor’s disposable income. Under the new law, the IRS will settle these expenses for debtors whose income is higher than the median for their State. The downfall of this regulation is that, for the most part, the allowed expenses assigned by the IRS are lower than actual living costs. For example, the IRS might not consider paying for cable or internet as a basic need that should to be covered. As a result, consumers will find themselves with less money to spend in their daily lives.

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