If you’re feeling overwhelmed by debt, you may be able to find relief through a consumer bankruptcy filing. Learn more by speaking with an Ohio bankruptcy attorney.
Introduction to Bankruptcy
Do you have questions about Bankruptcy? Watch the following video to hear from our attorney, Adrienne M Hines:
Bankruptcy is a program created by federal law that allows you to eliminate certain kinds of debt or create a payment plan to repay your debts over time. Bankruptcy also offers you legal protection while you go through the process of discharging or reorganizing your debts.
Good people can have their lives disrupted by illness, divorce, disability, or unemployment. We understand that for a lot of families, once you fall behind it can be seemingly impossible to catch up. Bankruptcy law exists to help people who became overwhelmed by debt to have some breathing room and get their lives back in order.
At Kademenos, Wisehart, Hines, Dolyk & Zeiher Co. LPA, we have years of experiencing handling countless bankruptcy cases with sensitivity and compassion. It’s our job to advocate for you and help you get back onto stable financial ground. Call us at (419) 871-9015 for a free consultation today.
The two types of bankruptcy filings available for consumers are:
Chapter 7 — Chapter 7 involves getting rid of your debts through a process known as a discharge. Debts such as credit card bills, medical bills, and personal loans not secured by collateral can be eliminated through a Chapter 7 without making payments. In essence, you get a fresh start. Chapter 7 also can allow you to get out from under a burdensome home mortgage or car loan if you’re willing to relinquish ownership of the house or vehicle. Most people who file a chapter 7 are able to keep a home or a car if that’s what they choose to do. In very rare circumstances, if you have significant equity in any assets, like a house you own (free and clear from any liens) your assets may be taken and sold to pay your creditors.
Chapter 13 — Chapter 13 involves re-paying your debts over 3 to 5 years through a court-approved plan. Your payment plan is administered by the Chapter 13 trustee for your region, who collects payments from you and distributes money to your creditors. Chapter 13 allows you to keep assets like a car or a home and catch up delinquent payments through your payment plan. Depending on your financial situation, you may only pay other creditors pennies on the dollar. Any remaining balance you owe for debts such as credit cards, medical bills, or personal loans not secured by collateral are discharged at the end of your plan. Chapter 13 plans are unique and different for every individual.
How filing bankruptcy can help you
Bankruptcy often is a last resort for people who haven’t been able to resolve their debts through other means, such as refinancing loans or negotiating payment arrangements with creditors.
People who file bankruptcy often have reached the point of facing legal action from creditors. If you’re being sued, you may face losing your home or having your wages garnished. However, filing bankruptcy puts a stop to that kind of activity through a provision known as the automatic stay. The automatic stay becomes active as soon as your bankruptcy is filed, and as soon as your creditors are notified that you filed.
The automatic stay applies only to bills that existed at the time of your bankruptcy filing and that were included in your bankruptcy. It does not apply to new bills you acquire after your filing. For example, if you are facing an electricity shut-off and file bankruptcy, your utility bill gets a reset on the date you file. The automatic stay no longer protects you if you fall behind again after you file bankruptcy. When that occurs, the electric company can then shut off your service.
The automatic stay can provide you the following kinds of protections:
- Stop collection activity such as letters or phone calls
- Stop utility shut-offs
- Stop debt lawsuits
- Stop garnishments
- Prevent repossessions
- Prevent foreclosures
Discharge of Debts
The other primary benefit of a bankruptcy filing is the discharge of your debts. If you file Chapter 7, you can get a full discharge of all eligible debts. If you file Chapter 13, the goal is to pay as much as your financial situation allows over 3 to 5 years. Any amounts you still owe after you’ve completed your court-approved payment plan are discharged and you will no longer owe them.
In Chapter 13, debts that are secured by collateral or that involve liens against property typically have to be paid in full through your payment plan. For a long-term debt like a home mortgage, you continue normal payments during your Chapter 13 payment plan — even when it is over. Past due mortgage payments can be caught up through a Chapter 13 by spreading them out over time.
Some types of debts are very difficult to have discharged in a bankruptcy. That means they have to be paid in full through a Chapter 13, and you will continue to owe any unpaid balance at the end of your payment plan. If you file Chapter 7, you also will continue to owe these types of debts under most circumstances. Some common types of debts that cannot be discharged include:
- Student loans
- Child support or alimony
- Criminal fines and restitution
- Some types of taxes
- A wrongful death or personal injury judgment you owe because of an accident you caused while driving under the influence of alcohol
You may be able to find relief through bankruptcy for:
- Credit card debt
- Medical bills
- Personal loans
- Car loans
- Past due mortgage payments
- Debt lawsuit judgments
- Tax debt
The Bankruptcy Process
There are many steps in the process of filing your bankruptcy and getting your debts discharged. Those include:
You’ll need to gather all of the documents you have that show your financial situation. Those may include:
- All of your bills
- Paycheck stubs or any other documents showing your income
- Tax returns
- Mortgage loan papers
- Car loan papers, proof of car insurance, and vehicle titles
- Credit card statements
- Personal loan papers
- Bank statements
- Documents with information about your retirement accounts
- Documents showing any income from stocks
- Lawsuit papers for any lawsuits against you
- Papers showing any garnishments against you
- Documents regarding child support payments
- Your driver’s license and Social Security card
You will also need to compile a list of your monthly expenses, such as your house payment or rent, what you spend on groceries, gas and vehicle maintenance, utilities, entertainment, health care, clothing, and other routine costs.
You’ll also need to complete a credit counseling session, which can be done in person at an approved credit counseling agency. Your required credit counseling session also can be done online or over the phone. Upon completion, you would receive a document that shows you completed the counseling. You should provide a copy of that to your Ohio bankruptcy lawyer.
Your Ohio bankruptcy lawyer will use the information in your financial documents to fill out the legal paperwork for your bankruptcy filing. Once the paperwork is complete, an experienced Ohio bankruptcy attorney will review the paperwork for accuracy before it can be filed in the appropriate bankruptcy court.
Bankruptcy cases are filed in special federal courts that only handle bankruptcy cases. For northern Ohio, bankruptcies are filed in the U.S. Bankruptcy Court for the Northern District of Ohio. Your Ohio bankruptcy attorney can file your paperwork online through the federal court system. A filing fee must be paid when your paperwork is filed.
Once your paperwork is filed, your creditors will likely be sent notice of your bankruptcy. Following, the automatic stay will typically be placed into effect.
Meeting of Creditors
After your bankruptcy is filed, the next step is called a “meeting of creditors” sometimes also known as a “341 hearing” in reference to the section of the U.S. Bankruptcy Code that requires the meeting.
The meeting of creditors takes place about 30 to 45 days after your paperwork is filed. You must attend this meeting. Your lawyer will be there with you. During the meeting, the trustee in your case will ask you some questions under oath to verify the information in your bankruptcy paperwork. If any of your creditors attend the meeting, they also may be allowed to ask you questions.
Chapter 13 Confirmation Hearing
If you filed Chapter 13, the next step after your 341 meeting is a confirmation hearing. You do not usually have to attend the confirmation hearing. At the hearing, a bankruptcy judge will approve or deny your Chapter 13 plan. It is relatively rare that a plan is denied, unless there’s some evidence that the information in your plan is fraudulent, or you did something improper before filing like transferring assets to a family member to avoid losing your property.
If you filed Chapter 7, then your case moves on toward discharge after your 341 meeting. Usually, you receive your discharge a few months after filing. If you filed Chapter 13, your discharge will come once your payment plan is completed.
Before you can get your discharge, you will likely need to go through a second credit counseling session intended to teach you financial management skills so that you can stay on track after your bankruptcy is over. You can usually use the same company you used for your first session to complete the financial management course.
An Ohio bankruptcy attorney can best advise you during every step of the bankruptcy filing process.
Life After Bankruptcy
Once your bankruptcy is over, you no longer have any legal responsibility for the debts discharged in your bankruptcy filing. Your creditors are no longer allowed to attempt to collect payment of those debts from you. You can move on with rebuilding your finances and your credit.
Filing bankruptcy will have an impact on your credit. A Chapter 7 stays on your credit report for 10 years. A Chapter 13 stays on your credit report for 7 years. You may be able to get credit after your discharge, but you’ll probably pay a higher interest rate and qualify for lower credit limits.
However, it is possible to rebuild your credit after a bankruptcy by using credit wisely and paying your bills on time.