There is a lot of stigma around being pinned under debt. The reality, though, is that most people don’t accrue their financial deficits through sheer carelessness – many wind up in the red after surprise medical bills, emergency spending or sudden loss of income.
When debt seems insurmountable, remember that the tool of bankruptcy is always an option. Chapter 7 bankruptcy specifically will wipe all a person’s “unsecured debts” clean. That is, anything they owe that is not backed up by collateral. This includes things like medical debt and credit card balances.
Filing Chapter 7 may seem like a major undertaking, but it does not have to be. Enlisting the help of a professional attorney will make the process run much more smoothly and painlessly.
Eight steps to a debt free future
Each situation is different, but in most instances, debtors can have most or all their unsecured debts forgiven after these 8 steps:
Receive credit counseling – It is Ohio law that six months before you may file for bankruptcy you must receive credit counseling. This helps to determine if you truly need to file, or if certain payment plans can solve your problems.
File your petition – Next you will need to submit several forms, petitions and budget calculations. This is where the heart of the process begins and where a professional is invaluable. They will make sure there are no errors and alleviate as much stress as possible from you.
Automatic stay – Once your forms are submitted, your automatic stay begins. This is where you can breathe easier because creditors may no longer contact you regarding collections
Trustee and creditor meetings – The court will assign a “trustee”, or a sort of manager, to oversee your case. You will meet with them and your creditors to discuss your finances. This may seem intimidating, but the reality is that creditors rarely show up for the meeting.
Official approval – At this point the court will decide if you are formally approved to have your debts cleared. This will be determined in a few ways, including the trustees observations and a “means test”, or a calculation of your income versus your debt.
Liquidation – During liquidation, any non-exempt property you own will be sold by the trustee and the funds will be used to pay your creditors. It is important to remember that you will not lose everything – there are many exemptions under Ohio law. Additionally, even if the value of your liquidation is less than the amount of your debt, the debt is still forgiven.
Attending finance course – As the process comes to a close, the law requires you to attend a financial management course to help ensure you do not end up in a similar situation in the future. You will need to file a form with the court proving you have taken the course.
Final moves – Eventually you will be mailed your bankruptcy discharge. This ends your automatic stay and marks the end of your journey through the process. Within a few weeks your case will be closed, and you’ll be ready to meet life debt free.
Filing for Chapter 7 bankruptcy isn’t so daunting when broken down step-by-step. Bankruptcy is simply a tool designed to help those in need – don’t be afraid to use it if you feel immobilized by debt.
