Find a Bankruptcy Attorney: Cleveland Ohio
When you realize filing for bankruptcy is your only option, life can become scary and unfamiliar faster than you ever imagined. Many individuals just starting to explore the bankruptcy process don’t even know where to begin, or what they need to make the most out of their case.
If you are in the early states of this process, know you are not alone. We are here to help clarify your first-time bankruptcy concerns.
Two Types of Consumer Bankruptcy
“Filing for Bankruptcy” is an umbrella term used for a number of different proceedings. What some don’t realize is that not all bankruptcy Chapters are equal— some have eligibility requirements, some are for individuals, and some are reserved for corporations.
For individuals, there are two Chapters you can file for, each with their own pros and cons. They are called “Chapter 7” and “Chapter 13.”
Chapter 7 Bankruptcy
Known as liquidation bankruptcy, this particular Chapter is used by individuals who truly do not have the means to pay off their debts. In order to qualify, you must pass a means test, in which your household income is compared to that of similarly situated individuals.
As such, the aim of Chapter 7 is to forgive large amounts of debt. This is particularly attractive to individuals who have large amounts of unsecured debt such as credit cards, medical bills, and utilities, as these debts are usually forgiven in the process of filing.
The downside to Chapter 7 is its far reaching impact on your credit score and creditworthiness. This type of filing will stay on your report for up to 10 years and make it very difficult to secure future loans or credit as you will be seen as a “high risk” borrower.
Chapter 13 Bankruptcy
Known as the wage earner’s plan, this type of bankruptcy is most commonly used by individuals with a stable income. As such, this plan aims to restructure your existing debt to allow you to pay it back in a more manageable way. For many, this results in payments made to a trustee over the course of 3 to 5 years until all your debts are repaid.
As individuals filing for Chapter 13 are repaying their debt, the impact this filing type has on your credit is slightly shorter. Normally, the filing will be on your credit report of 5 to 7 years.
Should I file for Bankruptcy?
After assessing the different types of bankruptcy, one of the first questions individuals and families ask themselves is whether or not they should file in the first place.
This is understandable. Bankruptcy filings have a lasting negative impact on your credit and are not a decision that should be taken lightly.
Some of the telltale signs that bankruptcy might be a necessary step for you is when debt starts overtaking your life. These signs can include:
- A house that is “upside down” and at risk for foreclosure
- Unmanageable medical and credit card debt
- Creditors are garnishing your wages
Are There Immediate Benefits?
Bankruptcy comes with many immediate benefits by instating an “automatic stay” on your current financial situation. This means that bill collectors, credit collectors, utility companies, and lenders can't pester you about missed payments or collect any money from you.
The automatic stay is there to help you take a breath while giving you time to gather your paperwork and speak to a lawyer without the risk of your lights going out.
Will I Lose Everything?
The idea of bankruptcy law is not to traumatize you or take away everything you have worked hard for. While you have to pay back your creditors, there are many ways around “losing everything” in Ohio bankruptcy cases. In fact, depending on what kinds of assets you own, you might realize that you will lose very little, if anything at all.
How is this possible? Through exemptions.
The Bankruptcy Code in Ohio gives these exemptions to protect a certain number of assets for individuals going into the bankruptcy process. This includes value in real estate, personal items, and even vehicles. While there is a capped amount for each exemption, many are pleasantly surprised that they can save most, if not all, of their belongings during the bankruptcy process.
Exemptions include the following:
$145,425 in home equity of you place of residence is qualified for a homestead exemption
- Personal Property
There are several divisions of personal property and each has their own exemption amount. Those which are of most concern to bankruptcy filers are the $13,400 household goods exemption, $,1,700 jewelry exemption, and the $4,000 motor vehicle exemption.
Wages are exempt, but only to a point. The current standard is that either 30 times the minimum federal hourly wage or 75% of your disposable income is exempt. Whichever is greater is the exemption that takes precedence.
In this category you will find IRAs, Roth IRAs, private pensions, and tax exempt retirement accounts such as 401(k), 403(b), and profit-sharing.
While this is not a complete list of exemptions, they represent the most common categories in which individuals ceiling for Chapter 7 and 13 bankruptcy alike worry they will lose substantial portions of their estate.
An Expert in Cleveland Bankruptcy
Bankruptcy is one of the few legal proceedings you can file for without the help or representation of a lawyer. However, just because something is possible, does not mean that it is ideal.
Making sure your finances are in good hands is the most important part or your bankruptcy case.
In fact, filing your own bankruptcy case would be detrimental to your outcome. This is why we fully recommend filing a bankruptcy law firm that you are comfortable with to help you in your case.
David Benson spearheaded his firm with the knowledge of over 20 years practicing law. These years were spent in diverse fields from oversight positions to client practice, getting a full view of law and how it can help everyday individuals take back control of their lives.
Looking to speak with someone about filing for Chapter 7 or 13? Contact us today and speak with a seasoned professional that can help point you in the right direction and understand the options available to you.
Benson Law Firm
The Hanna Building
1422 Euclid Avenue
Cleveland, OH 44115
Phone: (216) 230-3543
While this website provides general information, it does not constitute legal advice. The best way to get guidance on your specific legal issue is to contact a lawyer. To schedule a meeting with an attorney, please call or complete the intake form below.
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- Ohio City
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- St. Clair
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- and many more…
Cleveland, Ohio Bankruptcy Attorney