Like most big, bad scary things, bankruptcy has a reputation based on a few tidbits of truth and lots of embellishment. It's not nearly as frightening once you know the facts.

With a mind toward declawing the monster, here are a dozen misconceptions about bankruptcy.

12 bankruptcy myths

1. Everyone will know I've filed for bankruptcy 2. All debts are wiped out in Chapter 7 bankruptcy 3. I'll lose everything I have 4. I'll never get credit again 5. If you're married, both spouses have to file for bankruptcy 6. It's really hard to file for bankruptcy 7. Only deadbeats file for bankruptcy 8. I don't want certain creditors in my filing because I want to pay them 9. Filing for bankruptcy will improve my credit rating 10. You can't get rid of back taxes through bankruptcy 11. You can only file for bankruptcy once 12. I can max out all my credit cards and then file for bankruptcy

1. Everyone will know I've filed for bankruptcy
Unless you're a prominent person or a major corporation and the filing is picked up by the media, the chances are very good that the only people who will know about a filing are your creditors. While it's true that bankruptcy is a public legal proceeding, the number of people filing is so massive that very few publications have the space, the manpower or the inclination to run all of them.

2. All debts are wiped out in Chapter 7 bankruptcy
You wish. Certain types of debts cannot be discharged, or erased. They include child support, alimony, government-issued or government-guaranteed student loans, and debts incurred as the result of fraud. It's also very unlikely that a judge will discharge legal settlements you've been assessed, such as money you've been ordered to pay to someone who sued you.

3. I'll lose everything I have
This is the misconception that keeps people who really should file for bankruptcy from doing it, says Chris Viale, president and CEO of Massachusetts-based Cambridge Credit Counseling Corp.

"They think the government will sell everything they have and they'll have to start over in a cardboard box," Viale says.

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.

"For most people, they'll pass through a bankruptcy case and keep everything they have," says John Hargrave, a bankruptcy trustee in New Jersey. If you have a mortgage or a car loan, you can keep those as long as you keep making the payments (like the rest of us).

4. I'll never get credit again
Quite the contrary. It won't be long before you're getting credit card offers again. They'll just be from subprime lenders that will charge very high interest rates.

"There are innumerable companies that will provide credit to you," says California bankruptcy attorney and trustee Howard Ehrenberg. "I don't advise any of my clients to run out and run up the bills again, but if someone does need an automobile, they can go and will be able to get credit. You don't have to go underground or something to get money."

However, if you're planning to buy a house or a car, you might want to do that before you file. Those loans will be tough to get and the higher interest rate on such a large purchase would make a significant impact on your payments. Also, if you have a credit card with a zero balance on the day you file for bankruptcy, you don't have to list it as a creditor since you don't owe any money on it. That means you might be able to keep that card even after the bankruptcy.