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Bankruptcy is more beneficial than what myths make it out to be

Ohio consumers who are burdened with unmanageable debt may be exploring remedies to relieve the stress of creditor harassment and other actions. Knowledge is power, and consulting with an experienced bankruptcy attorney may provide the information necessary to make informed decisions. A lawyer may also dispel some of the myths about bankruptcy.

One misconception about bankruptcy is that the filer will lose everything. The truth is that, although Chapter 7 is known as the liquidation bankruptcy, exemptions exist, and assets required for a basic living will not be sold at auction. All assets are retained in a Chapter 13 bankruptcy. However, consumers must not expect all of their debts to be discharged. Bankruptcy will only discharge unsecured debts such as credit card debt and medical debt, but unpaid taxes, child and family support and student loans -- except under specific circumstances -- will remain the filer's responsibility.

Some may suggest that paying off all debts is the best option. However, if a person knows that he or she will not be able to pay debts within three to five years, it will be a futile effort filled with creditor harassment, repossessions and possible foreclosure. Filing for Chapter 13 bankruptcy will allow continued payment over an extended period with the protection of the U.S. Bankruptcy Code that will put an immediate stay on all creditor actions.

Ohio residents may also believe that filing for bankruptcy is a personal failure and that it will cause financial ruin. A skilled attorney can explain that filing for bankruptcy may be the most responsible manner in which to take charge of one's financial future. A lawyer can explain the pros and cons of bankruptcy as compared to other options such as debt consolidation and applying for debt relief.

Source: nerdwallet.com, "5 Bankruptcy Myths Dispelled", Sean Pyles, June 7, 2016

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