How to File Bankruptcy in Ohio: Things you must know
If you are facing a financial crisis and cannot afford to pay all your debts and want to start fresh, then bankruptcy is the option for you. To start fresh there are things that you must know before filing for bankruptcy in Ohio. Bankruptcy is a legal way to get your debts forgiven and help you recover financially. A good candidate for bankruptcy can save himself from the harassment of creditors, avoid his possessions from being seized, get his debts forgiven, and get to keep his assets and rebuild his life.
Filing for bankruptcy in Ohio can be an overwhelming procedure for people who are already burdened with financial issues and filing bankruptcy incorrectly can lead to failure of getting your debts discharged.
Bankruptcy is a legal process designed to help individuals and companies get a economic fresh start by discarding or making arrangements to repay unmanageable debt. It can also be a way for companies to end business and liquidate resources in a tidy way.
Bankruptcy in Ohio
Bankruptcy is a procedure governed by the federal law that helps an individual or a business who have encountered difficulties in meeting their financial obligations and debts. Before you file for bankruptcy in Ohio you need to understand the types of bankruptcy. There are two common types of bankruptcy for consumers in Ohio, Chapter 7 bankruptcy and Chapter 13 bankruptcy. They both have their similarities and differences. For a better understanding lets discuss both types of bankruptcy.
Understanding Types of Bankruptcy
Chapter 7 Bankruptcy:
Chapter 7 bankruptcy will be eliminating most or all of the consumer debts, but it can only be used only once in every eight years. Chapter 7 is quick and only in a few months you can start rebuilding your credit. The court will be appointing a trustee to liquidate your property that isn’t under the protection by Ohio exemptions. Exemptions can include your cars, homestead, clothing and the equipment that is being used for work and your household furnishings. You may be eligible for a “no asset” bankruptcy If all your property is exempted.
To file for bankruptcy in Ohio you are required to pass a test called a “means test” to determine whether you are eligible for Chapter 7 bankruptcy or not. In case you are not eligible for Chapter 7, you can still file Chapter 13 bankruptcy.
Chapter 13 bankruptcy:
Chapter 13 bankruptcy is more like a repayment plan under which you are able to consolidate payments to be able to afford to repay some or all of the debt affordably over a period of three to five-year without paying any fine or fees.
This is the best plan for someone who doesn’t qualify for Chapter 7, who have a stable income, not deadly financial crisis and wish to repay some of their debt so that they can keep an asset such as a house or a car. Plus, the automatic stay provision of Ohio bankruptcy law means that the creditors will stop bugging you with their phone calls and letters during this time period. And if you manage to successfully complete the payment plan approved by the court your debts covered by the plan will be discharged.
What much does it cost to File for Bankruptcy in Ohio?
The top cause of bankruptcy filings in Ohio was Medical bills last year. Despite of having an insurance, co-payment for the treatment can pile up. While recovering, combine that with a period of unemployment and you would be left with debts you will never be able to pay off.
According to the Bureau of Labor Statistics, the number of long-term unemployed people keeps hovering around 3.7 million. The long term unemployed people constitute about 35 percent of those who are seeking a job. As the economy carry on with the lag many people are unable to afford to pay for their living expenses and fall deeper into their debt.
One can start fresh with A Chapter 7 or Chapter 13 bankruptcy and avoid the creditor’s harassment and wage garnishment. Most debts including credit card debts, Medical bills and other unsecured debt may be discharged. But bankruptcy will not help save you if you owe student loans, spousal maintenance, child support or back taxes. Before filing for bankruptcy you must consider how you will bear the expenses and the fee for filing bankruptcy.
The fee for filing for bankruptcy protection
To file for bankruptcy, you need to pay the court filing fees. For either type of bankruptcy, the federal court filing fee is approximately $300. When filing for a Chapter 7, the judge may waive off the court filing fee considering the individual’s income which should be below 150 percent of the poverty line.
Pre-bankruptcy credit counseling and education courses also include in the mandatory costs one needs to take into consideration when filing for a bankruptcy. According to a study commissioned by the American Bankruptcy Institute the costs average $85. You may also need to look after an attorney fee. The attorney can provide you with more information about whether bankruptcy will suit you and your needs.
The Ohio Bankruptcy Income Limit
Ever since the 2005 bankruptcy law has changed, people who are looking to file chapter 7 bankruptcy need to pass a test called the ‘means test’. This test draws a comparison between your current income with the median Ohio income level to ensure that you are below it. If your current income is below the median Ohio income level, you are then eligible to file for bankruptcy under Chapter 7. But if your current income is above the median Ohio income level, then you are only eligible to file for bankruptcy under Chapter 13.
According to the law in Ohio an individual will become eligible to file for a bankruptcy under Chapter 7 only if their current annual earnings are below the median household earnings of a similar size. To put it in perspective, for an individual who is a sole earner in a household in Ohio, the median income is $51,297. If the number of earning members is increased to two in that household then the median income becomes $64,665, and if increased to three earning members it will be $77,642, and lastly for four earning members the median income will be $93,239. An additional earner in the household beyond 4 people will add $8,400 to the total income. But if the annual income is below the respective household category median, then a discussion with the lawyer about the filing procedure will be useful. If an individual is over the median income, he may still be eligible to file for a chapter 7 bankruptcy if he passes the mandatory means test.
When an individual decides to file for bankruptcy under Chapter 7 in Ohio there are a few limit regarding how much you can earn. While the Ohio law states that an individual need to earn below the median income to become eligible to file for bankruptcy under Chapter 7, it does not definitely mean that he cannot file for bankruptcy at all. If you earning is above the median income, you will become eligible to file for bankruptcy under Chapter 13 or a ‘repayment’ bankruptcy. This kind of bankruptcy filing is suits people with a lot of property to retain better. It can also prove to be beneficial for individuals who have sufficient equity.
For people who are not familiar with the process of bankruptcy or do not have an experience with bankruptcy, it is more likely to cause confusion and a sense of anxiety that which can be overwhelming at times. There are a number of factors involved that have the tendency to potentially grind the procedure to a halt if not done incorrectly. One very complicated aspect of bankruptcy that still confuses people who are not well informed on the matter is bankruptcy discharge.
Vital to the process, a bankruptcy discharge is what allows an individual from Ohio to start fresh because of the fact that it helps you save from trouble and debts are taken off the books. Generally discussing the importance of a discharge there are certain rules that explain what is dischargeable and what is not in bankruptcy.
One cannot know everything about bankruptcy unless you have a strong understanding of the laws and regulations regarding the bankruptcy process. Specifically, when it is about knowing what one is allowed to discharge, having an authority on with the matter makes the filing a lot easier.
The amount of time that it takes for a discharge to occur can vary, depending what kind of chapter bankruptcy was filed and when was it filed. In a Chapter 7 bankruptcy filing, a discharge is generally granted approximately 4 months from the initial date of the petition filing with the bankruptcy court. In a Chapter 13 bankruptcy filing, a discharge granted as is granted as soon as the debtor has completed all of his payments that were under the payment plan. This usually happens 3-5 years after the case is filed. The unsecured debts are cleared and included in the discharge that were not paid under the repayment plan.
Bankruptcy vs Debt Consolidation
As mentioned above, bankruptcy is a legal way to get your debts forgiven and help you recover financially. Debt consolidation is a planned approach that combines multiple debts into one loan or credit card with the goals of reducing both the number of payments you must keep track of each month and the amount of interest you pay.
If you’re having trouble handling several credit card bills and perhaps a medical bill or a personal loan, debt consolidation lets you unite, or consolidate, them by taking out a personal loan, line of credit or a new credit card with enough spending limit to pay off all the loans. This bailout plan can be a life saver.
How often can you file Bankruptcy?
You must pause for four years from the date you filed the Chapter 7 case to be qualified for a discharge in a Chapter 13 bankruptcy. If you have received a Chapter 13 discharge and you now want to file for Chapter 7: Ideally, you must wait six years from the date you filed the Chapter 13 before you can file for Chapter 7 case.
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