Vance P. Truman, Attorney at Law
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Medina Bankruptcy Law Blog

How did I end up considering bankruptcy?

Personal bankruptcy is not exactly what it seems to most people, and the results are often better than people expect. The concept means different things to different people suffering massive debt. The right type can rescue a family's financial future.

What are the different types of bankruptcies?

Federal bankruptcy laws: Chapter 7 exemptions

Chapter 7 bankruptcy filers will not have to sell "all" of their personal property to pay off their bills. In fact, most bankruptcy filers benefit from being able to keep more "exempt" property than they imagined before engaging in the process. Determining what property is exempt from the Chapter 7 process will depend on the laws that apply to the proceedings.

Here are the Chapter 7 exemptions under federal law:

  • Homestead: Homeowners can keep as much as $23,675 in home equity, or they can reserve up to $11,850 of this exemption (if unused) to retain other property.
  • Automobile: Your vehicle will be exempt up to $3,775.
  • Personal property: You can keep various furniture, appliances, books, pets and other personal property under federal law for a total exemption of $12,625 and $600 per item.
  • Retirement accounts: Your retirement accounts will be exempt from liquidation up to $1,283,025 in value.
  • Health aids: All health-related aids are exempt from Chapter 7 bankruptcy.
  • Jewelry: Chapter 7 filers can retain up to $1,600 worth of jewelry.
  • Exemption for married couples: Married couples who file for joint Chapter 7 bankruptcy benefit from double exemptions.

Don’t let these bankruptcy myths lead you down the wrong path

If you are strongly considering bankruptcy, you need to quickly separate fact from fiction. There are many bankruptcy myths that can get in your way, all of which can worsen your financial situation as opposed to making it better.

Here are five of the most common bankruptcy myths:

  • You will lose everything: This is myth number one, as many people believe that a bankruptcy filing will result in losing every last asset. With many exemptions in place, you may come to find that you're not going to lose nearly as much as you thought (if anything).
  • All your debt will go away: Even if you file for bankruptcy, there is no guarantee that all your debt will be wiped clear. For example, bankruptcy has no impact on student loan debt and back taxes. Also, with Chapter 13 bankruptcy, you're required to repay some or all of your debts through a repayment plan.
  • It's best to avoid bankruptcy altogether: As you learn more about the pros and cons of bankruptcy, you may begin to believe that paying off your debt is the best strategy. You should consider this, but don't assume that bankruptcy is a bad thing.
  • Filing for bankruptcy means you're a bad person: Sure, you may have made some financial mistakes in the past, but it doesn't mean you have failed as a person. In fact, taking the initiative by filing for bankruptcy shows that you're trying to make things right.
  • Bankruptcy will ruin your finances forever: A bankruptcy filing on your credit report is not ideal, but it doesn't have to stop you from reaching your future financial goals. As time goes by, you're able to do things to improve your credit score. For example, using a secured credit card will get you back on track.

The bank doesn't really want to take your home

When you get that foreclosure notice in the mail, it feels like the lender wants to take your home away from you. You imagine someone sitting in an office, grinning at the fact that they get to take the house, even though you made payments on it for years.

That can leave you feeling stressed and depressed. Thankfully, that fantasy isn't how it works. The bank does not really want your home. Lenders hope never to start the foreclosure process, even though they sometimes have no other choice.

Chapter 7 bankruptcy can help you get out of credit card debt

Like most consumers in Ohio, when you charge items to your credit card, you probably intend to pay for it. However, credit card debt has a way of overwhelming people.

It doesn't take long for a few frivolous purchases to add up to a huge amount of debt. Even if you only use credit cards for basic necessities, a few days of unpaid sick leave or a car accident may be all that stands between you and aggressive collection efforts.

What are the downsides of Chapter 7 bankruptcy?

Those who qualify for Chapter 7 bankruptcy will receive enormous financial benefits. The reduction of stress alone is well worth the effort in many cases. However, it's important for those who file for bankruptcy to also stay realistic about the process because there are some very relevant downsides to being a bankruptcy filer.

When debtors fully understand the potential downsides of Chapter 7 bankruptcy -- and can realistically weigh them against the benefits -- they can move forward with the processes in a grounded and practical fashion.

Are Ohio debt relief firms too good to be true?

Driving along the road, radio on, your ears perk up when you hear the ads that promise to help you erase your debt in a matter of months.

After the sleepless nights of worry about debt and the fear of answering the phone because it might be a bill collector, this could be the answer. You jot down the phone number of the debt settlement company.

Get the debt relief you need, the personal attention you deserve.

Call us today for a free consultation at 330-591-4729, or fill out the form below, and we will contact you.

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Medina, OH 44256

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