If you feel overwhelmed with crushing debt, filing for bankruptcy may be a way that you can reboot your finances and start over. There are usually two types of bankruptcy that individuals in Ohio may file: Chapter 7 and Chapter 13. Chapter 13 is reorganization bankruptcy in which you and the court work together to formulate a plan for you to repay the debt that you owe over the course of several years. Chapter 7, on the other hand, is a liquidation bankruptcy in which you pay off your debts by selling off some of your assets.
Both Chapter 7 and Chapter 13 have their own strengths and weaknesses, and if you are considering bankruptcy, you may think that one or the other seems preferable. However, it is not as simple as that. According to FindLaw, Chapter 7 and Chapter 13 each have their own eligibility requirements, and you must meet eligibility requirements in order to file.
For example, you cannot file Chapter 7 if you make enough money to qualify for Chapter 13. In other words, if you have a reliable source of income and make enough money to pay off your debt by means of a repayment plan, you must file Chapter 13 and reorganize your debt rather than liquidating assets under Chapter 7.
However, Chapter 13 has its own eligibility requirements. If the amount of your debt exceeds certain limits, you are not eligible to file for Chapter 13. Debts generally fall into one of two categories: secured debt (such as mortgages) and unsecured debts (such as credit card bills). There are different limits for unsecured and secured debts, and these limits undergo revisions periodically.
The information in this article is not intended as legal advice but provided for educational purposes only.