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What to Know Before Filing for Bankruptcy in Ohio
Bankruptcy, a legal way to have many debts forgiven, can provide a "fresh start" for Cincinnati, Ohio, residents who are struggling with debts that they are unable to pay.If you're a good candidate for bankruptcy, filing can keep creditors from harassing you and seizing your possessions, allow debts to be forgiven, and provide a way for you to keep your assets and begin to rebuild your life.
However, knowing whether you should file for bankruptcy and how to proceed can be overwhelming to individuals already burdened with financial problems. You can try filing by yourself to save money, but mistakes can cost far more than you save. An incorrectly filed bankruptcy can be dismissed without your debts being eliminated, and you may even be charged with fraud.
For this reason, it pays to consult with an experienced Cincinnati, Ohio, bankruptcy lawyer who knows the intricacies of the local courts, the judges, and the system.Most bankruptcy attorneys offer a free consultation to help determine whether bankruptcy is right for you. You can ask questions about what their fees will be and how the process works. The attorney will give you an idea of where to start and the processes you will need to go through to get the debt relief you need.Know what is involved first
Before filing, you need to understand what bankruptcy is and determine whether you qualify.
1) Understand Types of BankruptcyThere are two major types of consumer bankruptcy, Chapter 7 and Chapter 13, and you need to determine which is best for your individual situation.
Chapter 7 will eliminate most or all consumer debts, such as credit card debt and medical bills. It is over in a few months, so you can begin rebuilding credit quickly.Your unexempt property will be liquidated by a court-appointed trustee, but most or all property may be protected by your Ohio exemptions, which can include your homestead, clothing, cars, equipment used for work and household furnishings. If all of your property is exempt, you may qualify for a "no asset" bankruptcy.
Ohio requires that you pass something called a "means test" to determine whether you qualify for Chapter 7.If you are not eligible for Chapter 7, filing for Chapter 13 may still be an option.
Chapter 13 bankruptcy is a repayment plan where you can consolidate payments to repay some or all of your debt affordably over a three- to five-year period and avoid fees and fines. This plan is best for those who don't qualify for Chapter 7, who have a steady income, temporary financial problems and a desire to repay some of the debt in order to keep an asset such as a car or a house. If you successfully complete the court-approved payment plan, the debts covered by the plan are discharged (eliminated).2. Take a Financial Inventory
Before filing for bankruptcy, you must assemble all of your financial information, keep a file with all documentation, and print out all online records for:
- All sources of income
- All assets and property you own that is of value
- Your monthly household living expenses
- Tax returns for the last two years, deeds to any real estate, titles to cars, and documents for any loans
With the above in mind, you must run the financial means test calculator to see whether you qualify for Chapter 7. To do so, your income must be below the Ohio median for your size household, after debts and other aspects of your financial situation are considered. This is when it is helpful to have an attorney who can run all of the calculations for you and make sure everything is done correctly.
You can find the most recent medians under "Means Testing Information" at www.justice.gov/ust.
3. Determine how much of your property is exempt by checking the current list of Ohio exemptions.
4. Complete a Consumer Credit Counseling course.You must undergo credit counseling from an approved agency less than six months before you file your bankruptcy petition
5. Prepare and assemble your bankruptcy papers and forms. There are 50+ pages of forms detailing current debts, assets, income, and expenses, and your intentions regarding loans secured by collateral.
6. File required forms with the court and pay the required filing fees. Cincinnati is in the Southern District of Ohio. If you have lived in Ohio for at least 91 of the past 180 days (six months), you may file at the U.S. Bankruptcy Court Southern District of Ohio Cincinnati Divisional Office at:
221 E. Fourth Street
Atrium Two Suite 800
Cincinnati, Ohio 45202
7. Attend your bankruptcy hearing (341 Meeting). At this meeting the trustee will review your paperwork, assets and exemptions.
8. File motions to eliminate liens. Creditors may make objections to your motions, and you may respond to objections.
9. Complete a post-filing Debtor Education course.
What happens after you file
If you are filing Chapter 7, your non-exempt assets will be liquidated, and the trustee will pay your creditors from the proceeds. After this, the bankruptcy judge will issue a discharge order stating that the remainder of your debt has been discharged or wiped out and that creditors cannot continue to attempt collection.
If you are filing Chapter 13, once your payment plan is approved, you will begin making monthly payments directly to the trustee, who will then pay your creditors. After your 3-5 year payment plan is completed, any remaining debt will be discharged.
Be aware that there are certain "nondischargeable" debts that cannot be eliminated in your Ohio bankruptcy, usually including child support, most student loans, and most tax debts.
Do you need an attorney to file?
Without an attorney, you are more likely to make mistakes while filing for bankruptcy. Those mistakes can be costly and, in some cases, lead to a dismissal of your bankruptcy. Bankruptcy attorneys know how the legal system works, and they have experience dealing with courts and judges.
While you might be tempted to go it alone, be aware that there's a considerable amount of paperwork involved. There's also a great deal of research involved to understand the complexities of bankruptcy laws in your state. Critical errors not only hamper your chances of successfully filing for bankruptcy, they can also open you up to criminal charges if the authorities believe you are trying to commit fraud.
In short, it's best to consult an Ohio bankruptcy attorney so they can help you through the process and make sure everything is done correctly.