What Is Chapter 13 Bankruptcy
Chapter 13 bankruptcy may be right for you if you have steady income and can pay your basic expenses but find it difficult to keep up with your debt payments. Chapter 13 bankruptcy can allow you to keep your assets while discharging some or even all of your unsecured debts. Some of the advantages of Chapter 13 bankruptcy include:
- The opportunity to avoid foreclosure- If you have fallen behind on your mortgage payments, the Chapter 13 repayment plan can give you the opportunity to keep your home.
- No direct contact with creditors- When you file for Chapter 13 bankruptcy, you can pay a court-appointed trustee rather than paying creditors and having to maintain direct contact with them.
- The chance to pay off secured or non-dischargeable debts- If you have secured debts like a car loan or non-dischargeable debts like tax debts or child support, you can pay them off at a reduced amount.
Chapter 13 bankruptcy also comes with some disadvantages, including:
What Are The Top 5 Reasons People File For Chapter 13 Bankruptcies In The State Of Ohio
Chapter 13 Bankruptcy can be a favorable option for those who have financial issues and seek to retain ownership of certain assets. Chapter 13 Bankruptcy requires that debtors use a payment plan to pay off their debts to creditors. This type of bankruptcy requires that individuals commit to a payment plan that lasts three to five years. The court will seek to ensure that debtors are up-to-date on their payments with creditors otherwise the court will terminate the payment plan and may not discharge the individuals debts. In addition to having extended time to repay creditors, here are the top five reasons people file for Chapter 13 Bankruptcy in Ohio.
With the spike in foreclosure rates in the U.S., many homeowners have been forced to grapple with the possibility of losing their home to a lender. When a homeowner is facing foreclosure, Chapter 13 Bankruptcy can provide a way to prevent the foreclosure from being immediately entered on the record. When a homeowner files for Chapter 13 Bankruptcy, he or she may receive an automatic stay, which is a court order preventing any lender from collecting on an existing debt until a payment plan has been entered by the court.
If one files for Chapter 7 Bankruptcy, he or she faces the possibility of losing certain assets in the liquidation process. With Chapter 13 Bankruptcy, a debtor is able to retain ownership over possessions and does not face liquidation.
Ohio Means Test Exemptions
In some instances, you do not have to pass the means test to pursue Chapter 7 bankruptcy. These include situations in which the debt in not consumer debt like credit card or medical debt. You also are exempt if you are a disabled veteran and incurred your debt while on active duty or during a homeland defense operation.
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Debt Reorganization And Repayment
There are numerous benefits to filing Chapter 13 bankruptcy, including:
- Stopping foreclosure: Chapter 13 can stop a foreclosure any time prior to a sheriffs foreclosure sale and allow you to repay your mortgage arrears. You will still be obligated to make all future payments directly to the mortgage company, but it may not proceed with the foreclosure. Additionally, you might be able to modify the terms of your original mortgage to make your payments more manageable.
- Consolidating student loans: Although you may not eliminate student loans in Chapter 7 bankruptcy, you can consolidate student loan debts with your other bills in Chapter 13 and stop a collection action against you. We can stop the collection action and garnishments related to student loan debts.
- Co-signer protection: Your co-signers get protection, too in fact, the same protection that you receive under Chapter 13. Chapter 13 may protect your co-signers from collection activity while you are in your repayment plan.
- Stopping repossession: Our law firm can use Chapter 13 to stop a finance company from repossessing your vehicle. The past-due payments, along with the outstanding balance on the car loan, will be consolidated into the Chapter 13. The finance company cannot repossess your car, and you will not have to make a payment directly to the finance company. In some instances, we can even get your car back if it was recently repossessed.
Ohio Means Test Calculator
The income limit cutoffs are very specific for Ohio bankruptcy cases, so if you do not clear that threshold the next step is to go through a full Means Test. You can do this using a Means Test calculator to be certain you have the best chance of passing the Means Test. Unfortunately not all online Means Test calculators are updated as regularly as needed, so you might inadvertently be relying on old information. Upsolve provides a Means Test calculator that is kept current to the day for Ohio and all other states. This Ohio Means Test calculator will give you the best chance of passing the Chapter 7 Means Test by walking you through the reasonable expenses you can include to show that your money is already going as far as it can. Upsolve can also help with all other aspects of filing your Chapter 7 case in Ohio, from help with filling out the paperwork to what to expect at your 341 meeting .
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What Is The Bankruptcy Means Test In Ohio
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Written byAttorney Eva Bacevice.
What Are The Benefits Of Chapter 13 Bankruptcy
The benefits of Chapter 13 bankruptcy are that if your plan is approved, you may keep all of your property. This type of bankruptcy can also help you avoid foreclosure of your home and car repossession. As an added benefit, you can still qualify for Chapter 13, even if you make too much money to file through Chapter 7.
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Life After Chapter 13 Bankruptcy
Once the court approves a repayment plan, it is up to the debtor to make the budget plan work. Failure to make agreed-upon payments will bring the matter back to court for further review, which could include selling the debtors property to pay debts. Alternatively, the trustee can simply request the case be dismissed.
Bankruptcy may give debtors a breather from creditors, but there is a penalty to be paid on their . Under the federal Fair Credit Reporting Act, a Chapter 13 bankruptcy will be listed on the report for seven years. Debtors in this situation may find it difficult to get additional credit for years.
Chapter 13 bankruptcy can be a useful financial tool for people with serious debts who worry about losing their homes to bankruptcy. Anyone considering this course should consult a bankruptcy lawyer.
Chapter 7 Bankruptcy Features
- Faster bankruptcy, taking only months to complete
- It wipes out all of your debt immediately
- You may need to liquidate some of your assets to repay some creditors
- You must meet strict income requirements to qualify for Chapter 7. If your income is too high, you wont be able to take advantage of this type of consumer bankruptcy.
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Common Chapter 13 Bankruptcy Questions And Answers For Columbus Ohio
Below are answers to frequently asked questions about Ohio Chapter 13 Bankruptcy from some of our Columbus, Ohio Bankruptcy clients. If you have any questions not answered below, please call our Columbus, Ohio Bankruptcy Office for a free bankruptcy consultation.
What Other Debts Have to Be Paid In Full Under Ohio Chapter 13 Bankruptcy?
Debts that must be payed in full include Some taxes, some student loans, also child support/alimony, NSF checks, some cosigned debts, debts obtained under false pretenses, debts not listed, criminal debts, and personal injury or death caused by driving under the influence, mortgage arrearages and debts not initially listed.
Can the Creditors Collect from Me After Filing Bankruptcy Even If a Lawsuit Has Been Filed?How Does Filing Ohio Chapter 13 Bankruptcy Affect My Credit Rating?
The Chapter 13 will stay on your credit report up to ten years. During that time, it may be difficult to obtain credit. Certain financial institutions offer secured credit card accounts. This may be an excellent way to re-establish your credit. The Financial management course that you attend upon completion of your case may assist you with future credit needs.
How Long After Filing Chapter 13 Bankruptcy Do I Receive My Court Notice and Appear at The Hearing?
You receive your hearing notice approximately two weeks after the filing and the hearing date is usually set approximately four weeks after the date of filing.
In The Chapter 13 Bankruptcy Repayment Plan Your Debts Will Fall Into One Of Three Categories:
- Priority debts, which must be paid off during your plan. Those debts include back taxes and child and spousal support payments.
- Secured debts, which you usually must pay back in full. Examples of debt in this category include a home mortgage and a car loan.
- Unsecured debts, which in many cases arent paid in full by the end of the repayment plan. Instead, outstanding balances are discharged and voided by the court. These debts include personal loans, credit card debt and medical bills.
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Who Should File Chapter 13 Bankruptcy
Many people think of bankruptcy court as the final stop on a path to financial ruin, the only option left when repaying debts seems impossible. But theres hope even in bankruptcy, and Chapter 13 of the federal bankruptcy code offers the closest thing to a soft landing.
Sometimes called the Wage Earners Bankruptcy, Chapter 13 allows those with enough income to repay all or part of their debts as an alternative to liquidation. Its bankruptcy for those whose biggest problem is dealing with creditors demands for immediate payment, not lack of income.
One of its most attractive features is the chance to keep your home after Chapter 13 bankruptcy as long as you can pay the mortgage and any amount required by your Chapter 13 repayment plan..
Under Chapter 13, people have three to five years to resolve their debts while applying all their disposable income to debt reduction. The option allows applicants to eliminate unsecured debts while catching up on missed mortgage payments. Short-circuiting home foreclosure is one of the options most attractive features. Though keeping your home can be a major relief, youre required to spend years living under the supervision of a court-appointed trustee who will collect and distribute your payments.
Benefits Of A Chapter 13 Bankruptcy
A stable source of income, considerable assets, or non-exempt property not protected inChapter 7, as well as the ability to make a monthly payment to a trustee, are usually the circumstances that make Chapter 13 the right choice. Depending on your disposable income, your repayment plan may consist of a three-year or a five-year plan.
Chapter 13 bankruptcy can offer the following advantages:
- Secured debts can be extended throughout the bankruptcy payment period
- You have more opportunity to cure delinquent mortgage payments
- An automatic stay stops foreclosure on your home
- You are free from creditor contact
- Co-signers may be protected
- Payments are often lowered
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How Does Chapter 13 Bankruptcy Work
In a Chapter 13 filing in Ohio, a debtor is allowed to keep all his or her property while the court approves a reduced or interest-free repayment plan. Working with all parties, the attorneys for the individual filing prepare a written plan which details the terms of repayment. The plan includes the amount of the payments and the date they are to be made. The plan must be approved by the court and court-appointed trustee before taking effect.
The debtor will start making direct payments to the trustee within 30 days. Eventually, payments will be required to be made through a wage withholding unless special circumstances exist. As the Debtor makes payments to the Chapter 13 trustee, the trustee will in turn make payments to the creditors.
What Happens After Chapter 13 Bankruptcy In Columbus Ohio
For those facing financial difficulties in Columbus, Ohio, and surrounding areas, Chapter 13 bankruptcy may be your choice in regaining control of your life while also making manageable monthly payments.
But what happens once you take the plunge and file for Chapter 13 bankruptcy? How will it impact your life? The Jones Law Firm knows you have a lot of questions about Chapter 13 bankruptcy, which is why weve broken down the phases from filing to completion to give you peace of mind as you start the process.
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How Does A Chapter 13 Work
As mentioned above, in a Chapter 13 plan, the debtor makes monthly payments to a trustee, who pays creditors. To make these monthly payments, you must have some source of income that is regular, such as employment income or rental income. You are required to pay all your disposable income to the trustee for 36 months or more. The trustee will pay some creditors in full. These include secured creditors and creditors who hold priority debts, such as most tax debt. Other unsecured debt will also be paid by the trustee, but, depending on various factors, you may not be required to pay these debts in full. If at the end of the plan, there remains a balance on the unsecured debt, the balance is discharged. There are some exceptions, such as student loans, which we can further discuss with you. You do not lose any property in a Chapter 13 unless your plan proposes surrender of this property.
Why Chapter 13 Is Probably A Bad Idea
The two most common types of bankruptcy in America are Chapter 7 and Chapter 13.
In Chapter 7 bankruptcy, youâre able to quickly erase your debts, but you must give up expensive assets that arenât exempt.
In Chapter 13 bankruptcy, youâre able to keep expensive property like a house or a luxury car so long as you make monthly payments under a three-to-five year repayment plan.
But unlike Chapter 7 which results in a discharge of debts in 96% of cases, only about 40% of Chapter 13 cases end in discharge. For this reason and others, filing for Chapter 13 is usually a bad idea.
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Which Should I Use Chapter 7 Or Chapter 13
If you qualify for both types of bankruptcy, you are typically free to select the type that you and your bankruptcy attorney see fit. However, you cannot apply for Chapter 7 unless your income is low enough to pass the Means Test. Similarly, you cannot apply for Chapter 13 unless your secured debts are below $1,184,200 and your unsecured debts are below $394,725.
The primary benefit of Chapter 13, on the other hand, is that discharges any remaining unsecured debt upon successful completion of the payment plan. Additionally, it provides you with a second chance to catch up on any overdue payments.
To learn more about the differences between Chapter 7 and Chapter 13 bankruptcy, please call bankruptcy attorney Kenneth L. Sheppard, Jr. from Sheppard Law Offices today! We will be happy to help select the ideal option for your unique situation.
Chapter 13 Bankruptcy Attorney Columbus Ohio
Chapter 13 bankruptcy is a repayment plan that offers distinct protections under the Federal Bankruptcy Code, allowing a debtor to reorganize debt and pay creditors in an affordable manner. Chapter 13 bankruptcy is also called a wage earners plan because one requirement for a debtor to qualify for a Chapter 13 bankruptcy is that he must make a regular ongoing monthly income in order to make ongoing monthly Chapter 13 plan payments on his debt. The amount to be repaid monthly and the length of repayment vary greatly from case to case depending on the debtors goals and income.
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The Benefits Of Chapter 13 Columbus Ohio
One major benefit of Chapter 13 is that the debts repaid in the Chapter 13 plan are not necessarily paid back under the same conditions that existed prior to filing, instead the Chapter 13 plan restructures the debt so that the debtor repays often under more favorable conditions, such as lower to no interest rates. Other benefits include the opportunity to remove junior liens from secured property, such as second mortgages and home equity lines of credit.
The Chapter 13 restructuring process also affords the debtor the opportunity to keep his property, such as a house or a car, even if he is behind on payments when the case is filed even if a foreclosure judgment has already rendered or a vehicle has already been repossessed! If you find yourself in this position, time is of the essence and you need to meet immediately with a Columbus bankruptcy lawyer at The Nesbitt Law Firm to discuss your rights and remedies under the law.
What Is The Ohio Chapter 7 Bankruptcy Income Limit
May 7, 2019 By
If you are buried under a mountain of debt and your phone is ringing constantly with harassing calls from creditors and debt collectors, it may be time to consider filing for bankruptcy. Bankruptcy exists to help you regain control of your life without being weighed down by the nasty side effects of debt, including wage garnishment, mounting late fees, interest charges and unpleasant phone calls and letters. There are two major types of consumer bankruptcy filings: Chapter 7 and Chapter 13. It is important to note, however, that you dont necessarily have a choice between the two. Ohio Chapter 7 bankruptcy income limits will determine if you are eligible to file under Chapter 7.
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