Common Bankruptcy Myths

Common Bankruptcy Myths

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Myth #1: I’ll lose all my property and assets if I file a bankruptcy.

This is not true.  Most people who file a chapter 7 bankruptcy can keep their assets.  Ohio exemption laws provide protections for your property including the home you live in, your jewelry, cash, retirement plans, your furniture and other belongings.

People who file a chapter 13 bankruptcy can keep all of their assets, and offer a repayment plan to catch up on their mortgage and car payments, pay off tax debt, and pay down their student loans.


Myth #2: I won’t qualify for a loan for 5 years if I file bankruptcy.

People who receive a discharge (forgiveness) of their debt in a chapter 7 bankruptcy, often qualify for credit cards and car loans within a short period of time after their case concludes.  People who file a chapter 13 case can qualify for some loans while their case is still pending.

During our initial consultation I will give you many helpful tips about how to re-establish your credit after you file a bankruptcy case.


Myth #3: Bankruptcy won’t help with tax debts or student loans.

This is a common misconception.  Actually, under the right circumstances, some tax debts can be forgiven in a chapter 7 case.  If, however, the tax debts don’t qualify for a chapter 7 discharge, chapter 13 bankruptcy offers an opportunity to repay tax debts without the continuing accrual of interest and penalties.  This is a huge advantage for chapter 13 bankruptcy filers.  Student loans also can be included in a chapter 13 case for repayment.

We can discuss your particular debts and bankruptcy options in much more depth in the initial consultation.


Myth #4: Only low-income people qualify for filing a bankruptcy.

You may be surprised to know that people can file for bankruptcy relief regardless of their income or job status.  Everyone can experience financial difficulties for one reason or another, and chapter 7 or chapter 13 bankruptcy relief is available to almost everyone.


Myth #5: If I am married, my spouse must file a bankruptcy also.

This is not true.  There is nothing in the bankruptcy law that requires married couples to file a case together if they don’t want to.  If only one spouse has debts, he or she can file their own case alone.  If there are joint debts owed by both spouses, we can discuss your options and strategies in the initial consultation.


Myth #6: If I already filed a bankruptcy, I can’t re-file for 8 years.

This is another common misconception.  Even though you file a chapter 7 bankruptcy in the last 8 years, you still may qualify for a chapter 13 bankruptcy case.  Filing a chapter 13 will stop creditor harassment, collection and foreclosure lawsuits, wage and bank garnishments, and lien filings.  You should give me a call to find out more.


Myth #7: Debt consolidation is better for my credit than bankruptcy.

In my opinion, bankruptcy is often faster, cheaper and more effective than debt consolidation.  Most debt consolidation companies require you to sign a contract and pay them their fees up front before they attempt to negotiate with your creditors.  While you are paying the consolidation company’s fee, your creditors may continue to harass, file lawsuits against you, and garnish your wages and bank account.  Creditors are not required to work with the debt consolidator.  In fact, many credit card companies can refuse to work with debt consolidators, but you may not know that when you sign up.  Also, debt consolidation will not help you with your tax debts, mortgage and car loans, or student loans.


 

At my bankruptcy law office, I represent clients throughout Gahanna, and Columbus, Ohio, including the communities of Reynoldsburg, Delaware, Newark, Lancaster, Circleville, London, Bexley, Pickerington, Pataskala, New Albany, Obetz, Westerville, Worthington, Powell, Dublin, Hilliard, Grove City and Grandview; and in Franklin County, Delaware County, Licking County, Fairfield County, Pickaway County, Madison County, Athens, Fayette, Galia, Hocking, Jackson, Logan, Morrow, Pike, Ross, Union and Vinton.

Chapter 7 and Chapter 13 Bankruptcy