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Bankruptcy Myths Busted

On Behalf of | Jan 28, 2018 | Bankruptcy

Millions of Americans currently live paycheck to paycheck. They may be one small disaster away from living on the streets. If you are one of the many Ohio residents who is struggling financially, you have likely looked into the various debt relief options available to you. You might even be confused about some of them — particularly bankruptcy.

There is a lot of information floating out there about bankruptcy. A lot of it does not paint this debt relief option in a positive light. So, let’s bust some of the most common bankruptcy myths.

Myth number one: You can’t keep your property

While with Chapter 7 bankruptcy filings you may have to give up some of your property, you will not be left with nothing. In a Chapter 7 filing, non-essential property is typically sold and the money given to creditors as payment. Debts that may be discharged are then cleared — meaning you are no longer responsible for them. You will likely get to keep all your property with a Chapter 13 filing — if approved.

Myth number two: All your debt qualifies for discharge

As nice as that would be, it is not true. Not all debts qualify for discharge. A few that will stay with you according to current bankruptcy laws include:

  • Student loans
  • Spousal/child support
  • Certain tax debt
  • Civil judgments

Debts that are forgivable include medical expenses, credit card debt and personal loans — among various others.

Myth number three is: Bankruptcy will ruin your life

When you’re already struggling financially, it can be hard to imagine a debt relief option ruining your life forever. Some people do believe that bankruptcy is the worst way to deal with debt. But at the end of the day, it all really depends on how deep in debt you are.

For those who can, with strict budgeting, pay off their debts within five years, bankruptcy may not be the best option. For those who cannot, however, it really may be their best bet when it comes to seeking economic relief. Yes, it can affect your credit score, but credit can be rebuilt with hard work.

To do it or not to do it?

Only you can decide if filing for bankruptcy is worth it in the long run. No one else can make that decision for you. You can make sure your decision is an informed one, however, by seeking legal counsel.