Dayton Bankruptcy Law Blog

The thought of filing for bankruptcy can cause you fear and anxiety. Much of that probably comes from misinformation you have heard about bankruptcy.

The truth is that bankruptcy can be extremely helpful and relieving. If you are in the military, you may also receive certain benefits during the process.

Ohio residents who are considering filing for bankruptcy may also be wondering which type of bankruptcy will work best for them. Chapter 13 has many benefits, but it tends to work better for a certain set of people.

The United States Courts lists out the bankruptcy basics for Chapter 13. Known colloquially as a "wage earner's plan", this plan is ideal for people who are in a financial situation where they can make payments toward their debt. Debt is reorganized so that it is easier to pay off, but ultimately, it will be paid off. This differs from Chapter 7, in which items are liquidated in order to allow the individual to discard some of their debt.

You may feel confused about your options if you are experiencing financial difficulties and you are considering filing for bankruptcy. As you may know, your personal bankruptcy choices include Chapter 7 and Chapter 13. You and other Ohio residents may be able to manage your debt through a Chapter 13 repayment plan. While both of your options have benefits and advantages, you may be interested in learning the positive things about Chapter 13.

According to FindLaw, some of the benefits of Chapter 13 bankruptcy may include the following:

• You can lower your payments and restructure your debt, allowing you to repay your creditors in an affordable way.
• Instead of having a bankruptcy on your credit report for 10 years, as with Chapter 7, Chapter 13 only shows on your record for seven years.
• While repaying your debt under your Chapter 13 plan, you are protected from contact and harassment by your creditors.
• You may avoid losing your home and other significant assets with a Chapter 13 bankruptcy, as opposed to having some of your property liquidated with Chapter 7.

Across the United States, more than 770,000 people filed for bankruptcy in 2018, according to the U.S. Courts. Nearly 500,000 of those cases involved liquidation bankruptcy or Chapter 7, which wipes clean most financial debt people owe to various creditors. One major cause of these bankruptcies involves the high rate of medical debt in the country, and the inability to pay off health care expenses accumulated from surgical procedures, injuries, emergency room visits and treatment for chronic conditions. In fact, 62% of people who filed for bankruptcy listed medical expenses as the main reason for their inability to keep up with their financial obligations.

Although Americans are required to carry health care insurance, many cannot keep up with high deductibles, copays and monthly premiums. Even after paying the monthly premium payment to purchase the insurance plan, people are responsible for paying up to 100% of the medical costs until the deductible is met. High deductible plans can reach up to $10,000 or more in some instances. It can be extremely difficult to stay on top of all of these expenses, especially if people are unable to work because of the medical condition or injuries. People who are forced to stay out of work while healing may find it even more difficult to keep up with medical payments.