Bankruptcy is a legal proceeding that provides financially challenged individuals with debt relief. Unfortunately, there are many misconceptions about the process that prevent people from seriously considering it. To help you determine if bankruptcy might a viable solution for you, here are some common myths and the truths behind them.
What Are Some of the Misconceptions Regarding Bankruptcy?
1. You’ll Lose Everything You Own
While it’s true that Chapter 7 bankruptcy involves liquidating your assets to pay back your creditors, some possessions can be claimed as exempt. Also, if you file for Chapter 13, you don’t have to give up any of your assets. Instead, your debt is restructured into a manageable payment plan so that you can repay your creditors over a 3 to 5 year period.
2. Your Credit Will Be Destroyed
Filing for bankruptcy does take a toll on your credit score, but that doesn’t mean it’s permanently ruined. There are things you can do almost immediately to start repairing the damage, including reestablishing a responsible payment history by paying your bills on time. Once you’re able to open a new line of credit, you can work to boost your credit score by keeping a low debt-to-income ratio, avoiding high finance charges and interest rates, and paying your balance in full each month.
3. All Your Debt Will Be Wiped Out
Filing for bankruptcy erases most of your unsecured debts, including credit card bills, utility costs, personal loans, and medical expenses. However, there are some debts that neither Chapter 7 nor Chapter 13 can discharge. These include domestic obligations such as alimony and child support payments, any fines or restitution imposed by the court, and most back taxes and student loans.
4. The Filing Process Is Difficult
When you work with an experienced bankruptcy attorney, filing is relatively simple. Your lawyer will walk you through the process and recommend which type to file for, as well as help you fill out all the paperwork. They’ll also make sure everything is properly submitted so that there are no unexpected delays.
If you’re overwhelmed with debt, contact Harry B. Zornow in Hamilton, OH. For more than 30 years, this seasoned attorney has been helping clients reclaim their lives through debt relief options such as Chapter 7 and Chapter 13 bankruptcy. Visit his website to learn more about his services and call (513) 737-9770 to schedule a free consultation today.