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What are some bankruptcy myths?

On Behalf of | Dec 4, 2018 | Chapter 13 Bankruptcy |

When it comes to filing bankruptcy in Ohio, there are many myths. If you believe them, it could be harmful to you in the long run. Some myths vilify bankruptcy and could make you avoid filing when it really is the right option for your situation. Others can just confuse you and lead to mistakes when you do file. Knowing fact from fiction can enable you to make better choices when it comes to bankruptcy.

NerdWallet explains one serious myth is that it is better to pay off your debts than file bankruptcy. The truth is filing is not a bad decision. In some cases, it is the best decision. The hit your credit takes is minor due to what would happen if you tried to pay off debt you really cannot afford to pay. The general guide is that if you cannot pay off your debts within the next five years, then bankruptcy is probably the best choice.

Another common myth that makes bankruptcy seem bad is that you will lose everything you own. Again, this is untrue. You get exemptions under the law that allow you to keep some assets. When you file Chapter 13, you usually can keep the majority of your assets because it is a restructuring program where you will pay debts without liquidating.

Finally, a misunderstanding is you can get rid of all your debts through bankruptcy. You cannot dismiss some debts through the process. Student loans and child support obligations are just two examples. You should always make sure you understand what bankruptcy will do for your situation. This information is for education and is not legal advice.


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