Many people in Ohio think that bankruptcy is the answer to all of their financial problems when they find themselves facing an insurmountable amount of debt. They may be genuinely struggling to pay their bills and household expenses. But not being properly informed about bankruptcy can result in them not getting the debt relief they seek and lead to complications.
Here are some common myths about bankruptcy.
People who file are irresponsible
Many people believe that they must be financially irresponsible to file and benefit from bankruptcy. Debt is something many individuals from all walks of life and with different income levels struggle with. Things can happen to people that can transform them from comfortably affording their lifestyles and necessities to not being able to afford them at all. According to U.S. News & World Report, people who file for bankruptcy usually have experienced some type of hardship, such as divorce, serious illness and unemployment. They may also have child support, alimony, student loan obligations and tax debts that they may not be able to pay in addition to their credit card bills, mortgages and car notes.
Credit will never recover
Contrary to popular belief, bankruptcy does not negatively impact a person’s credit forever. Its effects are limited to seven years. However, many people notice improvements in their credit scores and profiles before that timeframe has passed.
All debts disappear
Bankruptcy does not absolve a person of all their debts. Chapter 7 bankruptcy makes it possible for people to keep their cars, homes and other assets while having their debts erased. Chapter 7 does not discharge certain debts like student loans, tax liens, child support and alimony, states NerdWallet.com. There are rare exceptions. However, Chapter 13 works a little differently. Debtors may keep their possessions, but their debts are rolled into a repayment plan. If they fall behind on their payments, they could lose their assets.
People who are interested in filing for bankruptcy should not let any myths and misconceptions they have about it deter them from improving their financial situations. They should evaluate their circumstances, research their options and seek out professional help if necessary.