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Do You Know Bankruptcy Facts From Fiction?

On Behalf of | Apr 28, 2018 | Bankruptcy

Has your financial situation gone through ups and downs during the last 5 or 10 years? Any number of unforeseen circumstances can rock your financial boat, especially an unexpected decrease in income (or loss of employment altogether) as well as a sudden medical urgency or other family crises.

If you experience several financial upheavals, you may find your finances so off-track that you need to explore immediate debt relief options. We’ve all read the helpful tips about saving more than we spend and avoiding treating credit like cash. While sound advice that really can make a positive difference, some situations call for more extensive measures such as filing for bankruptcy. If you cringed when you read that word because you’ve heard all sorts of bad things about bankruptcy, read on.

Don’t believe the myths

There are numerous misconceptions about bankruptcy. You’ve likely heard people say to avoid filing for bankruptcy, because you’ll never be able to restore your credit, buy a car or enjoy economic stability again. It’s true that no two situations are exactly the same, but it’s also true that it’s highly unlikely that bankruptcy will lead to such consequences. The following list debunks these and other bankruptcy myths:

  • People often worry they’ll lose all their assets if they file for bankruptcy. The truth is that most states allow exemptions that protect certain assets deemed necessary to sustain a reasonable lifestyle. Whether filing Chapter 7 or Chapter 13, it may be possible to retain ownership of certain possessions.
  • To the other extreme, you may hear misguided information stating bankruptcy eliminates 100 percent of your debt. This isn’t always true as certain debts are not dischargeable under certain bankruptcy processes. For instance, you may not be able to erase student loans, tax debts or child support by filing for bankruptcy.
  • Some people may advise you to avoid bankruptcy and simply keep plugging away at trying to pay off all your debts. However, this can be difficult to do if a bank is threatening foreclosure and you have no disposable income. Also, bankruptcy may give you the edge you need to move toward a more financially stable future.

If your debt amounts to more than half your income and you really have no feasible plan for paying off debt, it may be time to consider some alternatives. Two of the biggest myths associated with bankruptcy are that it means you have failed financially and that it ensures you will never be able to restore your good credit.

Neither of these assertions are true because filing for bankruptcy often provides the chance to restructure payments and reorganize a financial portfolio from the ground up. As for credit records, bankruptcy disappears from your credit report after a certain amount of time.

If you’re facing a serious financial crisis, it’s a good idea to seek guidance from someone in Ohio who knows the ins and outs of the bankruptcy process.