As consumer debt has skyrocketed to over $3 Trillion, many believe the only way out from under the mountain of bills is to declare bankruptcy. But is it right for you?

Many myths persist to misinform the public.

Myth: People who file bankruptcy can't get credit for 10 years

Nonsense. People in Chapter 13 can borrow money during the case; people who've filed Chapter 7 get inundated with credit card offers after they get their discharge. This is not credit at the best rates, but credit is available.

Myth: You lose everything you own in bankruptcy

Well over 95% of bankruptcy cases filed by individuals are "no asset" cases in which the debtor keeps everything he owns. That's because exemptions provide for assets that the debtor can keep and some assets, like pensions, are beyond the reach of bankruptcy trustees and creditors.

Myth: Bankruptcy represents personal or moral failure

More than 90% of bankruptcy filings are traceable to job loss; illness; or divorce, factors largely out of anyone's control. Bankruptcy is a safety value to prevent individuals from being buried by debts they can never repay.

Myth: You can't file bankruptcy if you have a job

The new "means test" is supposed to divert some filers who make more than the median income for households of their size in their state of residence to Chapter 13. The only way to fund a Chapter 13 plan is to HAVE a job. So, this is utterly untrue.

Myth: "You need to be flat broke before you should file."

“Probably the worst myth about bankruptcy is that you need to be flat broke before you should file,” says Sacramento bankruptcy attorney Gerald B. Glazer. “It is not good to wait until creditors are knocking on your door,” according to Glazer. Planning can prepare you for a bankruptcy that causes the least amount of financial disruption.