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For people who are facing severe financial challenges, including the possibilities of foreclosure or auto repossession, filing for bankruptcy may offer relief. It can also come with unexpected surprises, as one Ohio couple learned. The couple filed for Chapter 13, and notice was sent to all creditors. A late filing attempt left one secured creditor out of the repayment plan.

The creditor had a debt owed by the couple secured by a lien on their home. Unlike with unsecured debt, creditors are not required to file a proof of claim on secured debts to prevent them being discharged. However, they are required to file by a deadline to be included in repayment plans.

The judge in the case gave the couple the option to voluntarily include the debt in their plan. They chose to leave it out. The debt in the form of a property lien remains and must be repaid, but the couple’s home is protected from creditors by the court until conclusion of the case. Depending on the length of the Chapter 13 bankruptcy plan, this could mean the debt will sit for up to five years before the creditor can take action.

Debt relief by the courts offers a significant safeguard for Ohio residents against financial ruin. For instance, Chapter 13 can protect a debtor’s home, business assets, automobile or even furniture from creditors. However, attaining a fresh financial start under Chapter 13 requires establishing repayment plans and keeping current with them. It may be beneficial for those considering this route to speak with an attorney and learn about what the eligibility requirements are.