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.

Those who file for Chapter 13 bankruptcy need to create a payment plan that lasts for either three or five years. Under that plan, unsecured creditors need to be paid at least as much as they would if assets were liquidated in a Chapter 7 filing. In a Chapter 13 case, plan payments are made using a debtor’s disposable income, which is whatever is left over after accounting for reasonable living expenses.

Those who are facing financial challenges may wish to talk to an attorney. Legal counsel may be able to explain the benefits of filing for bankruptcy such as getting an automatic stay of creditor collection actions. This may put an end to collection calls, foreclosure or wage garnishment. It may also allow an individual to discharge some or all debts within weeks or months. An attorney can explain the eligibility and other requirements.