BANKRUPTCY IN OHIO

Get a Better Understanding AboutChapter 13 Bankruptcy In Ohio So You Can Choose Which Bankruptcy Chapter Is Right for You and Your Situation

CHAPTER 13

SCOTT R. NEEDLEMAN
BANKRUPTCY AND FORECLOSURE DEFENSE ATTORNEY

Financial difficulties affect far more than just your bank account. Worrying about debts and creditors can have a negative impact on your work and family life as well, ultimately making a bad situation worse. Bankruptcy may be the answer. In 2012, nearly 1.175 million consumer bankruptcies were filed throughout the United States, marking yet another year of increased filings caused, in large part, by the recent economic recession. If you decide to file bankruptcy, know that you are not alone. Once you have made the decision to file you will also need to choose which chapter is right for you and your situation. Most individual debtors file under chapter 7 or chapter 13. Understanding more about chapter 13 bankruptcy may help you decide if it is right for you.

BANKRUPTCY CHAPTERS AVAILABLE TO INDIVIDUALS

The ability to seek protection from debts and creditors is found in the United States Bankruptcy Code. Along with setting forth the rules and procedures for petitioning for bankruptcy, the U.S. Bankruptcy Code also divides the types of bankruptcy that can be filed into chapters. An individual debtor can file under chapters 7, 11, 12, and 13. A chapter 11 bankruptcy, while available to an individual, is typically used only when a small business is included in the bankruptcy or when the debts exceed the chapter 13 limits. Chapter 12 is limited to debtors who qualify as a family farmer or family fisherman. Commonly referred to as a liquidation, chapter 7 bankruptcy requires the debtor to pass the means test to be eligible to file. Chapter 7 is usually used by debtors with moderate to low income and who do not have valuable non-exempt assets they wish to

Chapter 13 Bankruptcy in Ohio

thecolumbusbankruptcylawyer.com

protect. Finally, chapter 13 is referred to as a wage -earners bankruptcy because it is commonly used by debtors who have a moderate to high regular source of income and/or who have valuable non-exempt assets to protect.

CHAPTER 13 BASICS
A chapter 13 bankruptcy commences when the petition for bankruptcy is filed with the appropriate U.S. Bankruptcy Court. To file in Ohio you must have made Ohio your primary place of residence for at least 91 of the 180 days preceding the filing of the petition OR your primary assets must have been located in Ohio during that time. When the petition is filed the court will issue an automatic stay to all creditors. The stay prevents a creditor from taking any action to collect on a debt owed by the debtor. A trustee will then be assigned to the case. The trustee handles the administration of the bankruptcy and repayment plan. You and your attorney will then develop a repayment plan that allows you to repay the majority of your debts over an extended period of time, typically three to five years. Once the bankruptcy judge accepts the plan you will begin making payments to the trustee. At the end of your repayment plan most remaining debts will be discharged, or eliminated.

CHAPTER 13ELIGIBILITY
You cannot proceed under Chapter 13 if you received a previous discharge under Chapter 7, 11 or 12 within the previous four-year period. If the prior case was a Chapter 13, you must wait two years before you are eligible for

Chapter 13 Bankruptcy in Ohio

thecolumbusbankruptcylawyer.com

another Chapter 13 discharge. In addition, there are limits to the amount of debt you can have in a chapter 13 bankruptcy. The limits are adjusted every three years. For April, 2013 through April, 2016 the limits are as follows: Unsecured debt -- $383,175 Secured debt -- $1,149,525

CHAPTER 13 REPAYMENT PLAN

In a chapter 13 bankruptcy the object is to repay the majority of your debts over an extended period of time. The debtor must file a repayment plan with the petition, or within 14 days after filing the petition, showing how the debtor plans to repay creditors. The debtor will pay a fixed amount to the trustee each month based on the amount of the debtors regular income. The trustee will then distribute the funds to creditors according to the plan. Claims in a bankruptcy are divided into priority, secured, and unsecured claims. Priority claims are things such as a federal tax debt or a child support debt. Your mortgage loan is an example of a secured claim. Unsecured claims are typically things such as a credit card or hospital bill. You are not required to pay back all of your debts during the repayment plan period; however, a creditor should receive more through a chapter 13 bankruptcy than the creditor would receive had the debtor filed a chapter 7. Moreover, priority claims must be paid in full and you must make your regular payments and catch up any past due payments for secured claims before your bankruptcy can be discharged.

Chapter 13 Bankruptcy in Ohio

thecolumbusbankruptcylawyer.com

Upon the successful completion of the repayment plan, remaining debts are usually discharged.

YOUR HOME IN A CHAPTER 13 BANKRUPTCY

For a debtor who is in default on a mortgage, chapter 13 may be the solution to preventing foreclosure if the debtor has the ability to cure the default given additional time. Filing for bankruptcy can halt foreclosure proceedings if they have been initiated against you. It can then allow you time to bring your loan current, thereby preventing foreclosure. Throughout the repayment plan period you will make your regular mortgage payment as well as make a payment to the trustee, a portion of which will go toward your mortgage arrears. By the end of your repayment period you should be completely caught up and current on your mortgage. If you have a second mortgage on your home you may be able to discharge the second mortgage. For this to be a possibility the current market value of your home must be more that the balance owed on your first mortgage.

YOUR CREDIT AND CHAPTER 13 BANKRUPTCY

If you are like most debtors considering bankruptcy one of your biggest concerns is how a bankruptcy will impact your credit rating. This concern is certainly understandable because filing for bankruptcy protection will impact your credit rating; however, it may not have the long-term negative impact people worry about. There is much argument and debate about whether a chapter 13 or a chapter 7 bankruptcy is worse for your credit

Chapter 13 Bankruptcy in Ohio

thecolumbusbankruptcylawyer.com

rating, yet there is no consensus among experts. Since there is no clear answer to that question, it is best to focus on which chapter is better for your overall situation instead of focusing in the impact it will have on your credit. Chances are that your credit rating is less than stellar now if you are considering bankruptcy. Filing a petition for bankruptcy does, as a general rule, cause your credit rating to go down shortly after filing. The degree to which it goes down depends on a variety of factors. A 50-150 point drop is common. While this may be discouraging, keep in mind that the drop is only temporary. Once you have filed your chapter 13 repayment plan, creditors included in the plan are supposed to stop reporting you as late. This alone will begin to repair your credit rating. Although a chapter 13 will remain on your credit report for seven years (versus 10 years for a chapter 7), it will be listed as discharged once yo u successfully complete your repayment plan. Debts included in the bankruptcy will also be listed as discharged or satisfied depending on how they were handled in the bankruptcy. Because the point of a chapter 13 bankruptcy is to provide a debtor with additional time to repay debts, a debtor will continue to build good credit throughout the repayment period if paying on secured debt such a home or vehicle. Therefore, on the date of final discharge a debtor should have eliminated a considerable amount of debt, have a recent history of paying on time, and have a much improved debt to income ratio. For many lenders a debtor just out of a chapter 13 bankruptcy is actually a fairly good credit risk.

Chapter 13 Bankruptcy in Ohio

thecolumbusbankruptcylawyer.com

WHY CHOOSE CHAPTER 13?

An in-depth consultation with an experienced Ohio bankruptcy attorney is essential when deciding what bankruptcy chapter is right for you; however, there are some common reasons why people choose to file chapter 13, including: Means Test if your income is sufficient to prevent you from passing the means test required for a chapter 7 bankruptcy you may be limited to a chapter 11 or chapter 13. Valuable Non-Exempt Assets if you have assets that do not qualify under an Ohio exemption and you wish to keep those assets you will need to file under chapter 13 because filing a chapter 7 would result in the trustee keeping those assets to repay creditors. Behind on Mortgage/Car Payment although you may be able to keep your home/vehicle when you file for bankruptcy you need to be caught up on the payments to keep the asset in a chapter 7. While this is also true in a chapter 13, a chapter 7bankruptcy only takes three to four months to conclude which doesnt give a debtor much time to catch up payments that have fallen behind. By filing a chapter 13 you are given more time three to five years-- to catch the payment up. Second Mortgage a second mortgage can be stripped through a chapter 13 bankruptcy if you currently owe more on the first mortgage than the property is worth. If you are facing financial difficulties you owe it to yourself and your loved ones to consult with an experienced Ohio bankruptcy attorney and find out

Chapter 13 Bankruptcy in Ohio

thecolumbusbankruptcylawyer.com

what your legal options are with regard to bankruptcy and which chapter will be most beneficial to you and your situation. United States Courts, Chapter 13 Fox Business, Chapter 13 Bankruptcy: How It Works NOLO, An Overview of Chapter 13 Bankruptcy

Chapter 13 Bankruptcy in Ohio

thecolumbusbankruptcylawyer.com

About the Author

Scott R. Needleman

The Needleman Law Office 5300 E. Main, Suite 109 Columbus, OH 43213 614-575-1188 thecolumbusbankruptcylawyer.com

Every associate at The Needleman Law Office is committed to handling your case in both a 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 fight to ensure the best possible outcome for your situation.

Chapter 13 Bankruptcy in Ohio

thecolumbusbankruptcylawyer.com