Get the facts about bankruptcy in Ohio

Being properly educated about bankruptcy is important before deciding whether or not it can help you.

Over the past few years, reports have indicated that the nation's economy is improving. While that may be true that does not mean that every individual's financial situation has improved. Many consumers in Cincinnati continue to struggle to make ends meet and to keep up with seemingly unending stacks of bills to pay.

A bankruptcy plan can offer a financial fresh start to these residents. Before making this choice, however, it is important to understand some facts about bankruptcy plans to avoid problems down the road. There are many myths that abound about bankruptcy.

Four common bankruptcy myths are:

  • Homeowners will always lose their homes in Chapter 7 bankruptcies.
  • Once paid or discharged through a bankruptcy, debts will disappear from credit reports.
  • A bankruptcy can eliminate any type of debt.
  • Debtors can never apply for home mortgages again after filing bankruptcy.

Simply put, none of these are true.

How can homes be saved in a bankruptcy?

Regarding the belief that homes are always lost when a Chapter 7 bankruptcy is filed, the truth is that this can happen. However, Forbes explains that under bankruptcy law, exemptions allow consumers to keep assets up to certain dollar values. This includes homes. If a home's value is below the level stated in an exemption, it can be retained even through a bankruptcy.

What happens to discharged debts?

In a bankruptcy, debts are either completely discharged or paid through an approved plan, such as in a Chapter 13 bankruptcy. Once a debtor receives a discharge from the bankruptcy, these debts will remain on a credit report but will note the paid or discharged status.

What can or cannot be included in a bankruptcy?

The American Bankruptcy Institute points out that some types of debt are unable to be handled or included in a bankruptcy. These include required spousal support payments, child support payments and student loans. If a consumer has amassed debt through fraudulent means, that debt will also be unable to be included in a bankruptcy.

How realistic is getting a mortgage after bankruptcy?

As noted by the New York Times, people wishing to obtain a new home mortgage after filing bankruptcy can do often do so. Many lenders will request information about the bankruptcy. This may include details about what circumstances led to the filing and how the applicant's current situation is now different.

Always get the facts first

Filing for bankruptcy offers many benefits to debt-laden consumers. However, it is essential to get the facts about the process first. Talking to an experienced lawyer is recommended.

Keywords: bankruptcy, financial, consumers, mortgage, Forbes