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Cuyahoga Falls Bankruptcy Law Blog

Keeping your home and vehicle in a bankruptcy

The bankruptcy courts in Ohio understand that by declaring bankruptcy, you are seeking a fresh start. However, without certain assets, such as a home and a vehicle, some people's fresh start could become as challenging as their struggle with overwhelming debt. At Debra Booher & Associates Co., LPA, we help our clients understand how exemptions are designed to ensure that they are able to take advantage of the benefits of bankruptcy without losing all of their resources.

When it comes to your home, that is, the real property where you actually live and not a rental or vacation property, you are allowed an exemption up to a certain limit. This amount fluctuates based on inflation, but it is generally around $125,000, and may currently be more. Factors such as how much your home is worth and how much equity you have in it may affect your exemption, as well.

Can some debts be left out of a bankruptcy?

When you make the decision to file for bankruptcy, you have made the decision to have your debts discharged. You may wonder if there are certain debts you can conveniently leave off your filing. Is your favorite credit card giving you tons of airline miles with every purchase and you don’t want to lose it? Do you have a debt to a family member or friend and fear leaving them high and dry?

There are rules for unsecured debts such as credit cards and personal loans when it comes to bankruptcy. The simple fact is, you are not allowed to keep these types of debts out of your bankruptcy. If you leave them out on purpose, it can jeopardize your filing.

Critics protest the Chapter 13 debt limits

Individuals in Ohio who have an income, but cannot meet their monthly obligations, may have an option to keep their property by filing a Chapter 13 bankruptcy. The U.S. Bankruptcy Courts explain that this process consolidates the debt, and then the filer makes payments over the next three to five years. Generally, secured loans such as a mortgage or vehicle loan have precedence over unsecured loans, such as medical bills.

However, a person is only eligible to file for Chapter 13 if he or she has secured and unsecured debts below the limits that are set by law. The amounts fluctuate, but as of this date, the maximum allowed for secured debts is $1,184,200, and for unsecured debts, the limit is $394,725. 

Certificates you need before your bankruptcy can be discharged

The U.S. Bankruptcy Code includes several requirements for filers in Ohio and across the country. One of these for anyone who plans to file a Chapter 7, 11, 12 or 13 bankruptcy is completing a credit counseling course through an approved agency, according to the United States Department of Justice.

Typically, agencies charge a fee for the class, and may also charge for the certificate required to begin the bankruptcy process. However, all agencies must offer fee waivers to people without the ability to pay. If a husband and wife are filing jointly, they may take the class together.

Should I reaffirm the loan on my car?

From the moment you began to consider filing a Chapter 7 bankruptcy in Ohio, you have had reservations because you worry about losing your transportation. Right now, you have a nice car, although you do have a loan and payment. The vehicle is not eligible as an exemption, though, and if it is liquidated, you may not be able to get another one as reliable without a high interest rate. Fortunately, you may be able to keep the car - as long as you are willing and able to keep making the payments.

According to Bankrate.com, your lender may be willing to reaffirm your loan. If so, you must file a reaffirmation contract with the bankruptcy court, then continue making your payments until the car is paid off. Evaluate your budget carefully before signing the reaffirmation agreement, though. If you default on the loan, the lender can repossess the car, sell it, and charge you for the balance you still owe. This could lead to wage garnishment or a lawsuit, and you will have another negative mark on your credit report in addition to the bankruptcy.

The Ohio homestead exemption may allow you to keep your home

At Debra Booher & Associates Co., LPA, in Ohio, we understand that worries over housing may be a major concern for anyone considering filing Chapter 7 bankruptcy. After all, if you lose your house, you must find a new place to live and move during a time when you are already struggling. You may be able to forego this stressful experience and keep your home, though, thanks to the Ohio bankruptcy homestead exemption.

If you have been struggling to pay your credit card debt or medical bills, but you have always made your house payment on time, you may be able to stay in your home, according to the Ohio State Bar Association. However, you must meet one of these other conditions, too:

  • You owe the mortgage holder more than the house is worth
  • You have equity in the home, but it is less than Ohio's current homestead exemption

Will my ex’s bankruptcy affect me?

Financial problems are common contributing factors in a divorce. If a couple is already struggling financially before a breakup, bankruptcy might seem like the best option before, during or immediately following a divorce.

What happens to you if your ex-spouse files for bankruptcy under Chapter 7 or Chapter 13? Your financial wellbeing doesn’t have to adjust to your ex’s new circumstances, so it’s worth knowing what to watch out for if they need to file following a divorce.

What are the benefits of filing for Chapter 13 bankruptcy?

You have run into some problems with being able to make your mortgage payments on your home. After much consideration and visiting almost every other alternative, you have recently started to consider filing for Chapter 13 bankruptcy. However, you are hesitant because of the often-negative imagery that is associated with a bankruptcy filing in Ohio. Now, you are wondering if there could possibly be any benefits to making this decision. 

According to the United States Courts, filing for Chapter 13 bankruptcy allows you a grace period where you are given the option of creating a payment plan. This plan covers all of the details relating to your commitment to repay debts in a timely manner. During this period of time, creditors are not allowed to continue any ongoing efforts to collect payments from you. They are also forbidden from beginning new collections plans. Some of the benefits of filing for Chapter 13 bankruptcy include the following:

  • Chapter 13 includes a provision that provides protection for third-parties, such as a co-signer. This means you can protect other people who may have helped you, from experiencing the repercussions of bankruptcy.
  • You have the chance to reorganize your financial situation and save your home from falling into foreclosure. 
  • If you have other debts that have already been secured, you can use those to make payments or extend their payment plan, rather than using the mortgage on your primary residence.

New game show’s grand prize? Paying off your student debt

The student debt problem in America is heading to prime time. On TruTV’s new show “Paid Off,” contestants will play for a chance to wipe away their college loans. In its own darkly comedic way, this new show is poking fun at a serious issue facing millions of people in the U.S.

Is the student loan problem a laughing matter?

Understanding what to do if your employer files for bankruptcy

You have been suspicious of the financial security of your employer for quite some time and have begun to look elsewhere for employment. However, nothing could have prepared you for the bombshell when you arrive at work and find out that your employer has filed for bankruptcy and will be liquidating its assets over the next several months. At Debra Booher & Associates Co., LPA, we have helped many people in Ohio to cope with the consequences that come as the result of having to file for bankruptcy. 

Upon receiving the news, your head is filled with questions; what will happen to my job? How will this affect my benefits? Will having worked for this company reflect poorly on a resume? One of the first things you should be aware of is how to continue once you know that your employer is planning to close its doors. According to Chron, before you come to an immediate decision about which direction to go with looking for a new job, be sure you understand what type of bankruptcy your company has filed for. Differences between certain bankruptcy protections can be quite significant and while your employer may be reassessing its financial security and debt allocation, it may not necessarily mean an end to your employment. 

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