Bankruptcy Services

Reasons to Consider Filing Bankruptcy

We understand that the idea of filing for bankruptcy can be terrifying. However, maintaining a troubled financial status quo will not resolve matters. You are probably well aware that neglecting financial obligations like your mortgage payments, car loans, credit cards, and medical costs is not sustainable, but you could be powerless to pay. With late fees and interest rates skyrocketing, it can make you wonder if you’ll ever be free from your financial burden.

You may be familiar with the downside of filing bankruptcy, like a diminished credit rating, turning over assets, and being unable to get loans in the future. While there may be some truth to the consequences of bankruptcy, it’s critical to understand the advantages of the process. The details will vary according to your specific situation, but some reasons to consider bankruptcy include:

Automatic Stay: When you file bankruptcy proceedings, the court places an automatic stay on your case. Creditors cannot take collection action, foreclose on property, turn off your utilities, sue, or harass you through calls and letters. The automatic stay also ceases eviction actions and wage garnishment.

Keep Your Property:  Going through bankruptcy does not automatically require you to sell all of your personal property. Through the application of bankruptcy exemptions, you may emerge from the process without liquidating or losing your assets.

Higher Credit Rating (Eventually): It’s true that a bankruptcy will affect your credit rating and remain part of your record for up to 10 years. However, once the matter is no longer on your credit report, you may be debt-free with an increased rating.

Enhanced Financial Responsibility: You won’t qualify for credit cards or lines of credit, which means you’re forced to live on your income and within your means. This will place you in a better position down the line and prevent future financial problems. Plus, bankruptcy laws require you to complete a credit counseling curriculum. Through these educational sessions, you’ll learn strategies and tools to embrace new, sensible habits.

Overview of US Bankruptcy Laws

The U.S. Bankruptcy Code is a massive, complicated collection of laws covering a wide array of entities, debts, and proceedings. This federal statute is the only one that covers bankruptcy, as there are no state laws regarding the process. Together with local bankruptcy court rules in Ohio, the Bankruptcy Code is the entire set of legal procedures for handling debt for both individuals and business entities.

The purpose of bankruptcy laws is to essentially give debtors a “fresh start” from their unmanageable financial obligations. The U.S. Supreme Court used this exact terminology in stating the goal of bankruptcy in a 1934 case. Bankruptcy is intended to provide a person or business with new opportunities, unencumbered by the heavy load of debt.

If you’re an individual seeking to reduce or eliminate your debt, your options for bankruptcy are within Chapter 7 and Chapter 13 of the Bankruptcy Code. Because the eligibility rules, process, and consequences are very different under these two chapters, it’s always wise to consult with experienced lawyers who focus on personal bankruptcy services. We may also be able to help file a Chapter 7 bankruptcy for your business, if it qualifies and it is the right path for you.

Chapter 7 Bankruptcy

Under Chapter 7 of the U.S. Bankruptcy Code, you may qualify to discharge certain debts. By going through the discharge process, you eliminate eligible debts entirely, which is why it’s called “liquidation” bankruptcy.

Qualifying for Chapter 7 bankruptcy depends on factors related to a means test, which include:

• How your income compares to the median in Ohio, for a household of your size;
• Whether you have enough disposable income to pay some debts;
• Your reasonable expenses; and,
• Additional considerations according to law.

Your eligibility to file under Chapter 7 is also contingent on whether you previously filed for liquidation bankruptcy or under a Chapter 13 repayment plan.

It’s important to note that some of your assets will be subject to liquidation, which is intended to compensate your creditors for the amount you owe. In Ohio, some property is exempt, and you will be able to keep it. Our Chapter 7 personal bankruptcy lawyers can tell you more about how the laws apply. Exempt property may include:

• Your home;
• A percentage of your wages;
• Your car, which is considered a tool for ensuring you can earn an income; and,
• Other assets, pensions, and personal property designated by law.

Chapter 13 Bankruptcy

Filing for bankruptcy under Chapter 13 of the U.S. Bankruptcy Code involves repayment of your debts, though at a lower amount than you actually owe. Your debts are not discharged like they are with a Chapter 7. Instead, you take advantage of debt relief, while protecting your income and designated assets.

Chapter 13 bankruptcy eligibility is based upon:

• The amount of your secured and unsecured debt;
• Your disposable income; and,
• Your proposed repayment plan.

The key to Chapter 13 is whether your creditors are willing to accept your repayment plan. You will be required to formulate a strategy for paying back a certain portion of your debts, and creditors will have the opportunity to object to your proposal. However, you don’t wait until your creditors accept or object – you must start paying back your debts under your own proposed plan a month after you file. Preparing the repayment plan is central to obtaining a favorable outcome in these proceedings, and our Chapter 13 personal bankruptcy lawyers can guide you through the process.

Call Now to Schedule a Free Bankruptcy Consultation

Our lawyers in Dublin, OH and Tipp City, OH meet with people in difficult financial situations every day, and provide personal bankruptcy services based on what works best for you. Mistakes made during a bankruptcy filing in Ohio can set you back significantly. With decades of legal experience, and a well-earned reputation for accessibility and results, Arenstein & Andersen Co., LPA will focus on finding an option that protects you now and in the future.

While this overview of bankruptcy laws may be helpful, it’s important to discuss your situation and options with a skilled bankruptcy lawyer. You need to understand the implications of filing for bankruptcy under Chapter 7 or Chapter 13, so you can make an informed decision. Please contact Arenstein & Andersen Co., LPA to set up a free bankruptcy consultation.

Call (614) 602-6550 or contact us online to learn more about our personal bankruptcy services.