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Cuyahoga Falls Bankruptcy Law Blog

Collectors can pursue stale debt

A Supreme Court decision in May 2017 set a significant precedent when it comes to debt collection that Ohio residents should be aware of. The decision makes it okay for collectors to file claims in bankruptcy proceedings for debts that have passed the statute of limitations and are thus time-barred.

This Supreme Court decision is a reversal of an appellate court's ruling. The 11th Circuit ruled that it was a violation of the Fair Debt Collection Practices Act to pursue a claim that was obviously time-barred from collection. Filing such a claim would be considered a false claim. The Supreme Court's reversal means that filing a proof of claim for such stale debt is not considered a false or deceptive practice under the law. The debt collection industry considered this change a return to the status quo and an end to the confusion created by the 11th Circuit's original ruling.

Rebuilding credit history after filing for Chapter 13

Filing for bankruptcy can be a difficult decision for Ohio residents, but it is sometimes the only way to stop creditor harassment, stop foreclosure, provide debt relief, and reduce interest payments. After filing for bankruptcy, many assume their credit is ruined. Though it will be noted on credit reports for seven years, there are ways to improve a credit score after filing.

The first step is to get on a budget. This is crucial to establishing good payment habits and saving money for emergencies. A budget should include all expenses, including debt payments, housing costs, discretionary spending, and savings. Since payment history is 35 percent of a total credit score, paying bills on time is vital to rebuilding credit. Setting aside an emergency fund should be a high priority in a budget, as this will eliminate the need to rely on credit cards or other loans in the event of an unexpected expense.

If I file for bankruptcy, will I have to give up my property?

One of the things that often holds people back from filing for bankruptcy when they could really benefit from it is the fear of losing personal property. Many Ohio readers often associate bankruptcy with a forced selling of all valuable property in order to pay off debts. In reality, bankruptcy is an organized, beneficial way to deal with overwhelming debt, all while keeping certain personal items.

There are certain types of assets and property that are exempt from the bankruptcy process. This means that you can keep it no matter how much debt you owe or what else you are required to do per the terms of your approved bankruptcy plan.

Trustee not permitted to make retroactive plan change

When Ohio debtors file for Chapter 13 bankruptcy, they propose a plan to repay creditors over three or five years. The court must approve the plan. The debtor's repayments are then supervised by a bankruptcy trustee. However, in a case in Texas, a bankruptcy trustee retroactively altered the payment plans for 25 cases. In April, a judge on the U.S. Bankruptcy Court for the Southern District of Texas said the trustee did not have the authority to do so.

The alteration put several debtors into arrears. The trustee had used a portion of the district's Standard Uniform Chapter 13 Plan requiring trustees to distribute home mortgage payments in the amounts specified by claims instead of what is in the plan. In a standard Chapter 13 plan, the payment is supposed to be adjusted while the overall plan is not supposed to be amended. However, the adjustment is supposed to be forward rather than retroactive as the trustee's was.

Unsecured creditors in bankruptcy

Ohio consumers who file for bankruptcy will see their creditors divided into three different groups. Priority creditors generally are first in line, before secured creditors and then unsecured creditors. A creditor is any person or entity that a debtor owes money to. An unsecured creditor did not require any type of collateral as a condition of approving a loan. Credit card companies are a common example of an unsecured creditor.

Unlike priority or secured creditors, unsecured creditors don't have a claim to any specific assets. Whether or not they get repaid depends on the type of bankruptcy that an individual is filing for. If a debtor files under Chapter 7, there is generally no income to pay creditors with. In other cases, creditors generally have 90 days to file a claim.

How bankruptcy impacts a credit report

When Ohio consumers file for bankruptcy, it will go on their credit report. The bankruptcy may appear on a credit report after it was first filed even if the case was dismissed or a debtor chose to drop the case after filing. Those who file for Chapter 13 bankruptcy should expect to see it on their credit report for seven years after the filing date.

Those who file for Chapter 7 bankruptcy will typically stay on a credit report for 10 years after the filing date. In some cases, it may be possible to get it removed early, but it may be an expensive process with no guarantee that it will be successful. In the meantime, debtors may opt to keep debt balances low and pay bills on time to boost their credit scores.

How to avoid spending traps after bankruptcy

While many of our posts focus on bankruptcy issues (i.e. discharging debts), we find it helpful to highlight some money saving tips that consumers can take advantage of so that they can avoid the need for bankruptcy protection. Indeed, there are a number of ways to save money that are popular (e.g. clipping coupons, taking shorter vacations), but arguably the most important way to save cash is to stop wasting money on retail items that can be purchased used.

Of course, many people know that buying a used car can save a great deal of money compared to buying a brand new car, but there are a number of used items that can be purchased that are nearly as good as brand new items.

Study finds seniors are falling deeper into credit card debt

Households in Ohio and around the country headed by individuals over the age of 50 now owe more money to credit card companies than younger households according to data compiled by a leading think tank and the AARP. Half of the older Americans surveyed by Demos and the AARP's Public Policy Institute said that they had used credit cards to pay medical bills, and one in three told the researchers that they regularly use their cards to pay for food and other basic needs.

The worrying trend of seniors turning to credit cards to make ends meet is sometimes seen as evidence of poor financial planning, and older Americans who have failed to save adequately for their retirements can find themselves caught in a debt trap that is difficult to escape. While younger people can often take on extra work or borrow from their parents during financial emergencies, seniors generally have few options available to them in times of need.

Can I seek bankruptcy protection for my student loans?

Higher education is expensive, and you may be one of the hundreds of college students who graduated with a significant amount of student loan debt. At the time of signing your loan agreement, you may have given little thought to how you would pay it off in the future, and many people find themselves in similar situations. If you are drowning in student loan debt, even years after graduating, you may be looking for a way out.

Like many other Ohio graduates, you want to know your options for dealing with student loan debt when you are unable to pay or make full payments on a regular basis. Bankruptcy is a beneficial option for people who are struggling with certain types of debt, but is it the right choice for you?

Unemployment benefits and bankruptcy filings

When Ohio consumers file for Chapter 13 bankruptcy, they must submit a repayment plan that has to be approved by the court. The repayment plan takes between three and five years, and it is generally based on the income of the debtor. A March bankruptcy court ruling indicates that individuals who are filing for Chapter 13 may be required to count unemployment benefits as income.

Shortly after she and her husband filed for bankruptcy, a woman in New Mexico lost her job and began to collect unemployment benefits. The woman stated that her benefits were received under the Social Security Act, so they should not be included as part of the income required to be factored in when creating a repayment plan.

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