Bankruptcy allows many Americans to improve their financial situation every year. However, before you can decide if it’s the best solution for your circumstances, you must understand what to expect. Unfortunately, several misconceptions about bankruptcy prevent many people from seeking the debt relief they need. Here are a few common myths surrounding the topic.

Understanding the Truth Behind Bankruptcy Misbeliefs

1. It Eliminates All Debts

Chapter 7 bankruptcy discharges unsecured debts, including credit card bills, medical expenses, personal loans, and utility bills. Generally, debtors are still responsible for financial obligations such as student loans, back taxes, mortgage loans, and child support. In certain cases, you can discharge taxes and student loans, but you should prepare to continue paying secured debts unless you plan to surrender that property to the creditor.

2. You Will Lose All Your Assets 

Debtors frequently hesitate to file bankruptcy due to fear of losing everything they own. While Chapter 7 allows a trustee to seize and sell a filer’s assets to pay off their creditors—known as liquidation—every state has exemptions that help safeguard property. As such, those who file typically get to keep the majority of their possessions. If you own high-valued real estate or assets, a lawyer can explore options that will protect them.

3. Bankruptcy Ruins Credit

If you’re struggling to pay the bills on time or you’re missing payments, your credit score has likely already dropped. Thus, receiving a  discharge of debt through bankruptcy can help repair your credit faster. Although your filing will remain on your credit report for about 10 years, you can start rebuilding your credit profile as soon as you close the case. Making timely payments and keeping a low debt-to-income ratio will demonstrate your creditworthiness.

For accurate and up-to-date information on bankruptcy, turn to Nancy V. Jacob in Cincinnati, OH. Offering more than 30 years of experience as a bankruptcy lawyer, she can assess your finances and advise you on debt relief options. With her knowledge of the law, she’s prepared to answer your questions and guide you through the process step-by-step. Call (513) 921-1400 to schedule a free consultation, or visit her online for more information on ways to reach your financial goals.