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Cuyahoga Falls Bankruptcy Law Blog

Bankruptcy and child support payments

Child support can be one of the most stressful and confusing facets of the divorce process. Some parents worry that their ex will not make payments on time or that the payments will not be enough. On the other hand, some people worry that they will face financial hardships due to the amount of child support that they have to pay. Moreover, both custodial and non-custodial parents may be facing financial challenges and decide to file for bankruptcy, which can add even more uncertainty to the situation.

It is important to understand how a bankruptcy could affect you with regard to child support, whether you are required to make payments or regularly receive child support. If you have back child support or are concerned that your ex will no longer have to pay the back child support that they owe, it is important to note that this will not be cleared as a result of bankruptcy. On the other hand, there are other ways in which bankruptcy can affect child support.

How can bankruptcy save you?

The word “bankruptcy” has many negative connotations attached to it. But bankruptcy is actually a positive solution for many people suffering from debt and financial stress. There are many benefits of filing bankruptcy and the process can help in a variety of ways.

Benefits of bankruptcy

Filing for bankruptcy during a midlife crisis

Some people are in the middle of a midlife crisis, which can be a very tumultuous time in one's life. People may question the decisions they have made and feel unsatisfied with certain aspects of their lives. Midlife crises can bring on significant career changes, prompt people to move on from a relationship they have been in for many years or pick up new hobbies. People may also experience similar challenges during a quarter-life crisis. Fortunately, there are a variety of ways that people may be able to ease some of their anxiety and improve their outlook on life during these crises, such as getting rid of the debt that one has accumulated over the course of years.

Bankruptcy can help people move on from a difficult midlife crisis for many reasons. First, a fresh financial start can eliminate a considerable amount of stress and open up all sorts of new opportunities. People may sleep better at night and feel better about their lives. Sometimes, debt is at the center of a midlife crisis or marital problems, and tackling this potentially serious issue can completely transform an individual's life.

Chapter 13 and your job

Also known as a wage earner's plan, Chapter 13 bankruptcy can be very beneficial for many people who have regular income due to a full-time job. However, it is important to take your job (as well as the income you earn) into consideration if you plan on filing for Chapter 13. You should be mindful of some of the immediate effects of filing for bankruptcy, from the advantages of this option to some of the responsibilities you will have, and you should also think about how this decision will affect you in the years to come.

By filing for Chapter 13, people can typically repay a portion of their debts or all of the debt they owe through regular payments over the course of three to five years. This can be very beneficial for those who are struggling with debt and tired of being harassed by creditors because it puts an end to collection attempts and allows debtors to work towards financial freedom. However, people may be unable to continue making scheduled payments due to the loss of their job or a decrease in the amount of income they receive, which may necessitate pursuing a hardship discharge.

What credit counseling for a bankruptcy entails

If you’re looking to file for a bankruptcy like Chapter 13 or Chapter 7, you’ve heard of the required credit counseling to obtain your bankruptcy. You may be asking yourself what the point of counseling is at this point. These counseling sessions are useful and personalized to your situation, and typically run less than two hours. In the grand scheme of the bankruptcy process, credit counseling comprises a fraction of the time spent in the process.

There are two types of credit counseling required in the bankruptcy process: pre-bankruptcy counseling and post-filing debtor counseling. Don’t worry, the two sessions differ in their focus, so you won’t waste your time in either. Here is what you can expect from both sessions:

Bankruptcy, divorce and planning ahead

People may run into many challenges when they bring their marriage to an end, and the same is true when it comes to the bankruptcy process. Sometimes, people find themselves dealing with both issues simultaneously. For example, someone may be experiencing financial challenges, leading to the breakdown of their marriage, and they may be trying to get rid of their debt by filing for bankruptcy at the same time. Or, someone may decide to file for bankruptcy because their spouse is no longer in their life and they want to move forward with the process, or because they believe doing so would be beneficial at this point in time. Regardless, it is essential to plan ahead.

By carefully preparing for any of the challenges that could arise, people may be able to improve their chances of a favorable outcome with regard to bankruptcy and divorce as well. It is essential to carefully examine key legal issues and certain unique considerations that may apply to one person’s circumstances. For example, those with a high net worth or a considerable amount of debt may need to pay close attention to property division laws. Various bankruptcy-related concerns may also need to be taken into consideration, such as determining which type of bankruptcy will suit one’s needs best.

How can you recover from bankruptcy quickly?

If you are an Ohio resident who is thinking of filing for bankruptcy, you are probably concerned about how this step will affect your future. While bankruptcy can make it difficult for you to obtain credit initially, do not despair. With the right approach, any financial roadblocks may be virtually gone within a few years.

An article in Forbes has clever advice on making a speedy recovery from bankruptcy. Action you can take right away is to sign up for free credit monitoring from a reputable company. This allows you to keep tabs on your credit score and watch it improve. You can make sure your accounts are being reported accurately and see the credit card and loan offers available to you as your finances get back on track.   

Qualifying for a mortgage after bankruptcy

Personal bankruptcy can often be your best option to avoid slipping further and further into debt. Yet it does not come without is consequences. The impact it can have on credit score (or more specifically, one's ability to finance major purchases such as a home) is typically what worries Cuyahoga Falls residents considering this option the most. You then likely have the same question that many who come to us here at Debra Booher & Associates Co., LPA ask: how soon after filing for bankruptcy can I qualify for a mortgage?

The answer to this question may depend on both the type of bankruptcy you file and type of home loan you eventually wish to pursue. According to information shared by Lending Tree, these specialty loan programs have the following post-bankruptcy waiting periods: 

  • FHA: 2 years for a Chapter 7 case, 1 year for a Chapter 13
  • VA: 2 years for a Chapter 7 case, 1 year for a Chapter 13
  • USDA: 3 years for a Chapter 7 case, 1 year for a Chapter 13

Job-related injuries and bankruptcy

When someone sustains an injury on the job, their life may unravel in various ways. They may encounter financial problems for various reasons, whether they cannot afford rehabilitation or are burdened with medical debt. Moreover, they may have to stop working temporarily, resulting in lost wages, or lose the ability to ever return to their previous position because of a permanent disability. On top of these hardships, they may be in a great deal of pain and they may be very worried about their future, especially if they are struggling with debt. For some people in this position, bankruptcy can help address some of these concerns.

Job-related injuries occur in many ways, from construction site accidents to workplace traffic crashes and even slipping while working in an office. These accidents can completely upend a worker's life, and they may be struggling with other hardships prior to the injury (such as financial problems over credit card debt) which make it even tougher to recover from the accident. Some people who have found themselves in this position have been able to restore their sense of hope and get rid of the debt they are buried in by filing for bankruptcy. However, it is essential to explore all of your options prior to making any important decisions regarding bankruptcy.

Bankruptcy and financial aid for college

Prospective college students have many responsibilities, from figuring out which school they want to attend to submitting an application and adjusting to life as a college student. However, the financial demands of college can be significant, and may even prevent some students from going to college in the first place. In order to address high tuition, many students and their parents take out student loans (which can be very difficult to pay off and may raise additional concerns related to unmanageable debt). However, financial aid eligibility, in some instances, may be affected by a previous bankruptcy.

If a parent has recently filed for bankruptcy, they may be ineligible for certain types of student loans. In these instances, a student may become eligible for another form of financial aid, and there may be other options on the table with respect to financing a young person's college education. Certain types of student loans are not affected by the parents of a college student filing for bankruptcy, so parents should not feel hopeless if they have recently filed for bankruptcy but are determined to help their child attend college.

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