With a Chapter 13 bankruptcy, you pay back a percentage of your debt. The remainder is discharged through the bankruptcy process. The amount you pay is dependent on several factors.
You make a monthly payment to a trustee who distributes the monies to your creditors. This lasts for 3-5 years according to circumstances. The plan you and your attorney craft determine your monthly payment amount.
You file the plan with the court and it is subject to approval. Once confirmed, you and your creditors must follow the plan. The entire process is overseen by the court and your attorney.
There are five qualifiers to file Chapter 13:
1. Your Income Is Too High to Qualify for Chapter 7
The Chapter 13 Means Test calculation considers two numbers. These are your required plan payment and the percentage of debt you must pay back.
When your annual income exceeds the median income for your household size, you’re required to be in the Chapter 13 plan for five years.
2. You Can Lose Property in Chapter 7 Due to Unprotected Equity
This allows you to keep your property, even if you would have lost it under Chapter 7 bankruptcy. In that case, you still pay the trustee to distribute funds to the creditors. The amount is the same as what they would’ve received under Chapter 7.
The only property you might have to turn over in Chapter 13 is a tax refund or an inheritance or personal injury award..
3. You Are Behind in Your Mortgage and Want to Keep the Property
The Chapter 13 bankruptcy allows you to get caught up with your mortgage. This also prevents the mortgage company from selling the property at a sheriff’s sale. There would be a monthly payment to the trustee.
The monthly plan payment includes paying the mortgage arrearages, plus trustee and attorney fees. Plus, you’d resume making your regular monthly mortgage payments. Depending on your county regulations, your regular mortgage fees may be rolled into your Chapter 13 plan payment.
4. You Previously Filed Chapter 7 Within the Past Eight Years
You may file a Chapter 13 bankruptcy within four years from the date that the prior Chapter 7 bankruptcy was filed. You would pay part of your debt under the Chapter 13 bankruptcy. The remaining debt would be discharged in the bankruptcy.
5. You Have Two Mortgages on Your Home and the First One Exceeds Your Home’s Value
A special action is filed when your first mortgage is greater than the value of your property. This will wipe out the second mortgage in the Chapter 13 filing.
A Chapter 13 bankruptcy may include other benefits that might apply to your circumstances. For instance, you may be able to reduce the value of your vehicle to fair market value in the plan and substantially reduce the interest rate. Talk to Canton bankruptcy lawyer, Mary Lou Burns to find out more Chapter 13 bankruptcy benefits that may apply to you.
The most notable reason to hire an Ohio bankruptcy attorney in Summit and Stark County is to have a person on your side. It’s important to team with not just any person, but one with daily experience in the Akron and Canton courts.
Having a person who knows collection agency tactics will give you peace of mind. Your attorney can handle the logistics of your bankruptcy paperwork. Your attorney can also guide you through the credit reporting bureaucracy.
We’ve all heard the terrible numbers of what happens to a person that represents themselves in court. A bankruptcy court is a unique mechanism with a lot of moving parts. It requires special expertise to keep the creditors at bay.
A full understanding of Ohio bankruptcy laws is also necessary to defend your position. You can bet the creditor will have an excellent attorney working for them. An Akron bankruptcy attorney knows the federal and local bankruptcy laws. They know what property is exempt from bankruptcy. They also know the details of filing timeframes, courtroom procedure, court etiquette, and current laws.
Having a trusted lawyer on your side can help determine if bankruptcy is right for you. The attorney can also guide you through the process and the required fiscal tests.
To prepare, an experienced Ohio bankruptcy lawyer will review your finances. They will explain your options. They’ll also give you extra non-bankruptcy options for which you might qualify.
Eliminate All Eligible Debt
The best bankruptcy lawyer will know which debts can be discharged and which bankruptcy chapter to activate.This will save you a great deal of money and guarantee you have no lingering debt after bankruptcy. For instance, a bankruptcy attorney in Akron, Ohio will know which debt is past the statute of limitations for collection and eliminate it.
An Ohio bankruptcy attorney can save you time with shortcuts. They know the system well and can get things done quickly. They’ll also save you time from conducting a lot of research, which you’d have to do if you represent yourself.
They will already be up-to-speed with the latest bankruptcy information and changes in the law.
The filing process requires pages of precise documentation. The details can make a difference in your positive outcome. Since the filing process is both crucial and timely, your Canton bankruptcy attorney can help you complete the paperwork.
Your lawyer will also provide legal advice on your disclosed assets, income, and expenses. Your decision-making will be based on their knowledge and experience.
Once you hire a bankruptcy lawyer and officially file your paperwork, a “stay” will be granted. This stops the creditors from calling you. You’ll be able to inform your creditors or debt collectors to contact your lawyer instead.
Your Akron bankruptcy lawyer will be able to run interference for you. This will be the first step in your relief.
Other relief comes in knowing your attorney will cover for your mistakes and prepare you for court. Your lawyer will let you know what will happen during each step of the process. Your confidence will grow knowing your attorney knows every step along the path to recovery.
They will also sit by you in a creditor meeting and see to your best outcome.
Risks of Filing without an Ohio Bankruptcy Lawyer
One mistake could destroy your future. For instance, a judge could throw out your case based on an incomplete or incorrect filing. This could block you from a second filing or release your protection from creditors.
When it comes to property you are trying to protect, an incorrect listing of assets could lead to you losing your possessions. Or, you might no longer be able to discharge certain debts.
Worse yet, committing fraud with your bankruptcy paperwork can land you in jail. Everything must be disclosed to the judge and trustee, not hidden. For instance, you cannot sign over an asset as a gift to a friend or relative with plans of them returning the gift to you at a later date.
An experienced Akron bankruptcy attorney knows how to deal with the trustee. They also know how to talk to your creditors. If you forgo an attorney, you’d be responsible for both forms of communication.
Be careful about putting yourself in an awkward position. You don’t want your communication skills to negatively impact your bankruptcy discharge. Clear and appropriate communication can make a difference in you keeping thousands of dollars.
Also, how will you respond if a creditor files a lawsuit or contests your discharge of debt? An Ohio bankruptcy lawyer knows exactly what to do in that scenario to keep your money safe.
Ohio Bankruptcy Exemptions
State bankruptcy processes differ from federal ones. Some states attempt to protect their people with more substantial forms of relief. In some states, the individual has a choice to select the federal or the state process.
When filing for bankruptcy, if you live in Ohio, you must use the Ohio bankruptcy exemptions. The good news is that Ohio has an extensive list of exemptions to help with your relief.
This does not stop you from using federal non-bankruptcy exemptions. These exemptions protect qualifying property like military retirement benefits. The below list is not an exhaustive list of exemptions, but some of the more common ones.
How Exemptions Work
Steering through the exemption list can be difficult. This is due in part to the legal language used when describing the exemptions. However, it is important to know those protections are for your benefit.
Some find it hard to look for the right combination of exemptions while their property is at risk. Instead of focusing on the fear of the process, understand that the exemptions help you. The exemptions do not hurt your goals in any way.
An experienced Canton bankruptcy attorney will explain the process and position you for success.
Think of it as a tax exemption. The more legitimate exemptions you find, the more money you get to keep. The exemption laws protect your property from creditors. this allows you to keep more of what is yours.
Once a trustee is appointed to your case, they are empowered to sell your non-exempt assets to pay down your creditors. They are not able to sell your exempt property. This can include IRAs, burial plots, etc.
The process has you turn your property over to the temporary care of the bankruptcy court. This collection of your property is referred to as your bankruptcy estate. Once done, the majority of your debt is forgiven. This includes unsecured debts like credit cards.
If the sum of your bankruptcy estate is exempt, all your debt might be discharged without having to sell off any of your assets. But exemptions can’t protect your assets if you don’t claim the exemption. This is another reason to hire an Ohio bankruptcy lawyer.
Each exemption can either protect the full value of the asset in question or up to a certain dollar amount. The specifics behind each exemption will help explain what is necessary to qualify for its coverage.
Ohio’s homestead exemption protects a certain amount of equity in your primary home. You can protect up to $145,425 of real property that is used as your residence. Keep in mind that the exemption is attached to the amount of equity, not the market value of the residence.
If your house is valued at $425,000 and you owe $475,000, then you have zero dollars of equity and, thus, you don’t have to worry about losing your home. However, if you owe $325,000 on the house, then you have $100,000 of equity, all of which is protected because it is less than the $145,425 homestead exemption. This means the Ohio bankruptcy trustee can find no value in selling the house to pay creditors.
Real estate purchased as an investment does not have this protection. Nor does a second residence.
Wild Card Exemption
The wildcard exemption allows you to pick an asset to protect. You can claim the exemption for any single piece of personal property. This exemption is valued up to $1,325 for an individual filer.
Most people use this to keep something that is personal or sentimental from seizure and sale. Only consider this exemption after you’ve claimed all other exemptions.
Personal Property Exemption
There are separate exemptions that cover miscellaneous items like vehicles, household goods, jewelry and health care aids. The exemption has qualifying rules and a capped ceiling amount.
Married couples filing together can double their personal property exemptions.
In the case of a motor vehicle, Ohio’s exemption amount is $4,000. If your car’s Blue Book value is $9,000 and you owe $7,000, then you have $2,000 of equity that is exempt. This means the trustee will not be able to liquidate the car to pay creditors.
Miscellaneous Property Exemptions
Here is a quick list of other personal property items. The allotted exemption amount is also listed.
- Cash on hand not to exceed $500
- Household goods totaling up to $13,400 but not exceeding $625 per item (furnishings, appliances)
- Jewelry up to $1,700
- Single burial plot
- Society death benefits up to $5,000
- Awarded funds for personal injuries up to $25,175
You’ll want to get clarification on qualifying information for each of the above.
There is also an exemption covering pensions and retirement plans.
Included are 403Bs and 401Ks, IRAs, SIMPLE IRAs, Roth IRAs, SEPs, Keoghs, and ERISAs. Also covered are public employee retirement benefits. In each case, you’ll need to verify the exemption amount based on qualifying factors.
Any pension covered under federal tax exemptions is usually exempt under the Ohio bankruptcy laws.
There is a minimum of 75% of disposable weekly earnings.
An Ohio bankruptcy attorney in Akron or Canton can help you with this calculation based on your actual wages.
The following exemptions are available to cover public benefits.
- Worker’s compensation
- Child tax credit
- Earned income credit
- Crime victim benefits
- Vocational rehabilitation credit
- Disability assistance
- Unemployment compensation
- Public assistance
There are several types of insurances that can be protected.
- Group life insurance policies
- Fraternal society benefits
- Disability benefits
- Life insurance proceeds for your spouse
- Other life insurance policies that prohibit payment to creditors
Alimony and Child Support
Child support and alimony (or maintenance) are considered exempt in Ohio. The only caveat is that of reason. The payments must be reasonably necessary for the ongoing support of the filer’s dependents.
Tools of the Trade
You can protect up to $2,550 of books and tools of your trade, business, or occupation. Business partnership property can also be protected.