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Bankruptcy myth #1: People do not lose every item they own

When individuals turn to bankruptcy, they have countless questions and concerns about the process. One of the biggest worries for many people is the fear that they will lose everything they have-their furniture, television, clothes, and even kids toys.

But consumers should know that this is a myth and simply not true.

While it's correct that those who file for Chapter 7 bankruptcy will face a liquidation of their assets to pay for their outstanding debt-but only certain assets.

Bankruptcy laws stipulate that certain property is exempt from liquidation and off limits to the bankruptcy trustee. The types and how much, however, will depend on the state the bankruptcy is filed.

In the state of Florida, pensions, other retirement accounts as well as life insurance policies, for instance, cannot be touched. Additionally, Florida has what's known as a homestead exemption, which means that consumers can exclude their home in their bankruptcy and do not have to count it as an asset.

There are other types of exemptions certain consumers may qualify for. Click here to find out more information about bankruptcy facts and help available.

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