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Bankruptcy myths of which to take note

Ohio residents who have lost their jobs, incurred unanticipated medical expenses, gone through divorce or any other significant financial hardships may be considering their options. While personal bankruptcy may be the better choice for many -- considering the protections offered by the federal Bankruptcy Code -- many misconceptions or myths are linked to bankruptcy proceedings. The first myth is that bankruptcy ruins the filer's credit record forever. That's not true. In fact, any other debt relief option could also adversely affect a consumer's credit score; moreover, offers of secured credit cards may arrive within as little as one month following a discharge in bankruptcy.

Another misconception is that bankruptcy will eliminate all debts. Personal bankruptcy discharges unsecured debts such as credit cards and medical debts. Child support, student loans, taxes and other debts will still be payable; however, with the lesser burden after the discharge, funds may be available to pay nondischargeable items. Some consumers go on spending sprees before filing for bankruptcy, thinking that those debts will be discharged. However, the bankruptcy court may regard such actions as fraudulent that is not dischargeable in bankruptcy.

Although bankruptcy can bring some level of relief for consumers, it is not a magic remedy for all financial problems. Chapter 7 bankruptcy will typically see some assets liquidated to obtain funds to pay creditors, and a Chapter 13 bankruptcy's reorganization period stretches over three to five years in which modest living may be required. However, bankruptcy will offer a consumer an opportunity to regain financial stability.

Ohio consumers who want to learn the truth about bankruptcy and how it can help may want to consult with an experienced bankruptcy attorney. After assessing the client's financial situation, the lawyer can explain the pros and cons of each bankruptcy option. With the skilled guidance of the attorney, the consumer can make informed decisions on matters that will likely have a positive impact his or her financial future.

Source: U.S. News & World Report, "5 Bankruptcy Myths Debunked", Susan Johnston Taylor, Accessed on Dec. 17, 2016

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