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The truth about bankruptcy

Making the decision to file for Chapter 7 bankruptcy protection can be a difficult one for many people in Oregon. They may not have a full understanding of the bankruptcy process or laws, and there are often many rumors that abound over how bankruptcy can affect them. However, it is important for people to understand what is fact and what is fiction.

Some people may think that a better choice over bankruptcy is to pay off their debts. However, this is a bad idea if they won’t be able to pay those debts off over the next five years, and their debt to income ratio is over 50 percent. Another myth is that if they file for bankruptcy, they will not be able to rebuild their credit quickly. In truth, getting rid of that debt has been shown to help people raise their Equifax score to 620 from an average of 538.2.

Rather than looking at bankruptcy as a step downward, it is important for people to realize that it is there as a tool to help them. Through this process, they can recover from unexpected debt like medical bills, which they had no control over. They should also know that even if they file for Chapter 7, they won’t lose everything they have. They can save some assets for their daily life, like a car, under the exemption laws, depending on the state they live in.

Having all of the facts about the bankruptcy procedure is important to ensure that people are making the right decision. They could find it of benefit to meet with an attorney who can explain to them how bankruptcy laws work and show them available options.

Source: Money magazine, “5 Bankrutpcy Myths You Shouldn’t Believe,” Sean Pyles, June 13, 2016

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