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7/27/2019 Filing Chapter 7 Bankruptcy in Ohio
1/7
FILING
IN OHIO
CHAPTER 7BANKRUPTCY
THENEEDLEMANLAWOFFICE
SCOTT R. NEEDLEMANBANKRUPTCY AND FORECLOSURE DEFENSE ATTORNEY
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The recent recession in the United States caused many hard-working
individuals and families to face insurmountable financial problems. If you
are among those people, filing for bankruptcy protection may be your best
option. If you are like most people, the decision to file bankruptcy is not
one that will be reached easily; however, once you understand how
bankruptcy works as well as the long-term consequences of filing for
bankruptcy you may find that making the decision is a little easier.
OVERVIEW OF BANKRUPTCY CHAPTERS
Your ability to file for bankruptcy
protection comes from the U.S.
Bankruptcy Code. Bankruptcy,
therefore, is governed by federal law.
Because bankruptcy falls within the
jurisdiction of federal law, the rules
and procedures are the same for
everyone regardless of their state of
residencewith one exception. Individual states have the option to use the
federal exemptions for state residents or implement their own exemptions.
An individual may file for protection under chapters 7, 11, 12, and 13 of
the Bankruptcy Code. Although an individual may file under chapter 11, it
is usually used by small businesses. Chapter 12 is limited to family farmers
and fishermen. Most individuals, therefore, file under chapter 7 or 13.
WHAT IS A CHAPTER 7BANKRUPTCY?
A chapter 7 bankruptcy is often referred to as a liquidation bankruptcybecause a debtor must liquidate all non-exempt assets to pay off creditors
during the bankruptcy. For this reason, debtors who own valuable non-
exempt assets typically decide to file a chapter 13 reorganization or
wage-earners bankruptcy instead of a chapter 7 bankruptcy.
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Along with a consideration of assets, a debtor must pass the means test
to be eligible to file a chapter 7 bankruptcy. The means test looks at a
debtors monthly income compared to other similar households in Ohio as
well as the debts the debtor has to
determine if the debtor is able to
repay them if given an extended
period of time to do so. If a debtor
does not pass the means test, he or
she will need to file under chapter 13
of the U.S. Bankruptcy Code.
A chapter 7 bankruptcy is the simplest
of all bankruptcies. All non-exemptassets are sold (though there typically
are no non-exempt assets) and the
funds earned from the sale used to
pay creditors. All remaining debts that can be discharged are then
discharged, or forgiven.
WHAT IS THE PROCESS FOR A CHAPTER 7
BANKRUPTCY?
A typical chapter 7 bankruptcy will only take four to six months to
complete. The steps required for a typical chapter 7 bankruptcy include:
1. Credit counseling. The first step is to complete the required creditcounseling course from an approved provider. This can be
accomplished online for a fee of around $50.
2. Filing the petition. Next you must prepare and file a petition andall additional schedules and paperwork with the appropriate U.S.
Bankruptcy Court. You will need a number of documents to complete
the initial paperwork such as your tax returns, proof of income and a
list of all creditors.
Filing for Chapter 7
bankruptcy can be a
powerful tool for dealing
with overwhelming debt.
But it isn't available to
everyone.
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3.AutomaticStay. When your petition is filed the court will enter anautomatic stay. This order protects you by ordering all creditors to
cease any attempts to collect on debts, including foreclosure
proceedings, eviction, and garnishment.
4.Assignmentoftrustee. After the original petition is filed, the courtwill assign a trustee to your case. This is the person who will oversee
your bankruptcy.
5. Meeting of creditors. The court will notify all creditors that youhave filed for bankruptcy protection. A meeting of creditors is then
scheduled. You will need to attend this meeting; however, it is not
usually held in a courtroom. Instead, the meeting is typically held at
the trustees office. At the meeting, creditors are given the
opportunity to question you regarding your income and ability to
repay your debts. In a chapter 7 bankruptcy it is not unusual for
creditors to not attend the meeting if they believe it is clear from
your petition that you cannot repay your debts.
6. Sale of assets. If you have any non-exempt assets that can be soldthe trustee will effectuate the sale and use the proceeds to pay
creditors.
7. Secured debts. If you own a home or vehicle that is used assecurity on a loan, you will need to re-affirm the loan with the
creditor if you plan on keeping the asset.
8. Debtor education course. You must also complete a debtoreducation course prior to discharge.
9. Discharge. The court will schedule a discharge date. At this point,all debt that was not re-affirmed will be discharged unless is falls into
a category of debts that cannot be discharged.
WHAT ARE EXEMPT ASSETS IN OHIO?
As mentioned previously, the individual states decide whether the federal
exemptions will be used or state exemptions when a debtor files for
bankruptcy. Although some states allow you to choose between the federal
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and state exemptions, Ohio does not. Some of the more commonly used
Ohio exemptions as of 2013 include:
Homesteadin 2013 Ohio significantly increased the homesteadexemption to $132,900.
Personalproperty$450 of cash on hand or deposited in a bankaccount. $3,675 in a vehicle. $12,250 in household goods with a
$575 limit on an individual item.
Child/Spousal supportto the extent reasonably necessary forsupport.
Tools of the trade$2,325 in implements, books, and tools ofyour trade, occupation, or business.
Wildcard-- $1,225 in any property.WHAT DEBTS CANNOT BE DISCHARGED IN A CHAPTER
7BANKRUPTCY?
Although most debts can be discharged
in a chapter 7 bankruptcy there are some
debts that are not dischargeable under
the U.S. Bankruptcy Code. The most
common debts that cannot be discharged
include:
Certain types of tax claims or past-due obligations.
Debts not set forth by the debtoron the lists and schedules the
debtor must file with the court,
meaning if you fail to include the
debt it will not be discharged.
Debts for spousal support, childsupport or alimony
Chapter 7 bankruptcy
may make you sacrifice
property, yet not
discharge all your debt. If
you are inclined to file for
Chapter 7 bankruptcy,
take a moment to decide
whether it makeseconomic sense.
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Debts for willful and malicious injuries to person or property Debts to governmental units for fines and penalties Debts for most government funded or guaranteed educational loans
or benefit overpayments unless you can prove that having to repay
them would cause an undue hardship.
Debts for personal injury caused by the debtor's operation of a motorvehicle while intoxicated
Debts owed to certain tax-advantaged retirement plans Debts for certain condominium or cooperative housing fees
HOW WILL FILING BANKRUPTCY AFFECT MY CREDIT?
Unfortunately there is no simple answer that this question. Although a
chapter 7 bankruptcy will
remain on your credit report
for ten years, if may not
negatively impact your credit
rating for anywhere near that
length of time. Most debtors
who file a chapter 7
bankruptcy already have a
credit score that is less than
stellar. Often, your credit
score will actually improve as
soon as the bankruptcy is discharged because your debt to income ratio
has improved dramatically. If you have a steady source of income, some
lenders will consider you a good credit risk as soon as the bankruptcy is
complete because they know you cannot file bankruptcy again for at least
eight years. Obtaining a mortgage loan after filing a chapter 7 bankruptcy
though will usually take a minimum of 18 months and likely closer to two
years or more. Your post-bankruptcy efforts to improve your credit rating
will go a long way toward determining the impact the bankruptcy has on
your credit score and your ability to obtain financing.
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For a debtor who is struggling to pay bills every month, yet continuing to
fall farther behind, filing for protection through a chapter 7 bankruptcy may
be the answer.
United States Courts,Liquidation Under the Bankruptcy Code
United States Courts,Discharge Under Bankruptcy
NOLO,Ohio Bankruptcy Exemptions
About the Author
Scott R. Needleman
Every associate at The Needleman Law Office is committed to handling your case in both
personal fashion and in a professional manner. In other words, we treat you the way we
would want to be treated. We will take a personal interest in your situation, making sure
you understand exactly what is happening and what options you may have. Then well fig
to ensure the best possible outcome for your situation.
The Needleman Law Office5300 E. Main, Suite 109Columbus, OH 43213614-575-1188
http://thecolumbusbankruptcylawyer.com/
http://www.uscourts.gov/FederalCourts/Bankruptcy/BankruptcyBasics/Chapter7.aspxhttp://www.uscourts.gov/FederalCourts/Bankruptcy/BankruptcyBasics/Chapter7.aspxhttp://www.uscourts.gov/FederalCourts/Bankruptcy/BankruptcyBasics/Chapter7.aspxhttp://www.uscourts.gov/FederalCourts/Bankruptcy/BankruptcyBasics/DischargeInBankruptcy.aspxhttp://www.uscourts.gov/FederalCourts/Bankruptcy/BankruptcyBasics/DischargeInBankruptcy.aspxhttp://www.uscourts.gov/FederalCourts/Bankruptcy/BankruptcyBasics/DischargeInBankruptcy.aspxhttp://www.nolo.com/legal-encyclopedia/ohio-bankruptcy-exemptions.htmlhttp://www.nolo.com/legal-encyclopedia/ohio-bankruptcy-exemptions.htmlhttp://www.nolo.com/legal-encyclopedia/ohio-bankruptcy-exemptions.htmlhttp://thecolumbusbankruptcylawyer.com/http://thecolumbusbankruptcylawyer.com/http://www.nolo.com/legal-encyclopedia/ohio-bankruptcy-exemptions.htmlhttp://www.uscourts.gov/FederalCourts/Bankruptcy/BankruptcyBasics/DischargeInBankruptcy.aspxhttp://www.uscourts.gov/FederalCourts/Bankruptcy/BankruptcyBasics/Chapter7.aspxRecommended