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Dayton Bankruptcy Law Blog

What is an automatic stay in a bankruptcy?

If you are one of the many people in American who are overwhelmed with credit card bills, medical expenses, mortgages and other forms of debt, you may be familiar with receiving continuous calls from creditors and collection agencies. Collection agency representatives may call at all hours of the day and night and may even threaten to take legal action if you don’t make payments on your debt. In some cases, creditors have threatened to throw the debtor in jail or even take their children if they do not pay up. An automatic stay keeps these creditors and collection agencies from contacting you during the bankruptcy process.

Once you file your Chapter 7 or Chapter 13 paperwork, a letter is sent to collection agencies telling them to stop all actions against you. Agencies are no longer able to pursue or initiate lawsuits, make demanding phone calls, garnish your wages or make other threats in an attempt to gain payments. It is extremely important that you make a comprehensive list of all the creditors you own when submitting your bankruptcy paperwork, since these are the agencies that will be given the automatic stay. While some automatic stays may be temporary, most last the duration of the bankruptcy until your debt is fully discharged.

What are your debt relief options outside of bankruptcy?

If you are currently living with mass amounts of debt in Ohio, you may feel increasing pressure to do something to relieve yourself of your overwhelming financial obligations. While bankruptcy is a great way to get a fresh start, you may not be eligible for either Chapter 7 or Chapter 13 bankruptcy. Moreover, it may simply not be the best debt relief option for you. If it is not, you may wonder what, if anything, you can do.

NerdWallet outlines three different approaches you can take to debt relief, the first of which is debt management. When you join a debt management program, you make a single payment each month to a credit counseling agency, which then distributes the payment among your creditors. Because of the long-standing relationships credit counseling companies have with creditors, they can typically negotiate for reduced interest rates and waived fees, which means lower payments for you. However, the tradeoff is that you must close all your credit card accounts before joining the program, which can hurt your credit score in the beginning.

Navigate the holidays during bankruptcy

Bankruptcy can take its toll at any time, but especially during the holiday season. During months notorious for increased spending, it can be challenging not to participate.

However, when undergoing bankruptcy proceedings, a spike in spending is highly discouraged. Thankfully, there are a few things you can do to help navigate the holidays during a bankruptcy.

Can foreclosure scammers take my home?

Ohio homeowners who face the specter of foreclosure may, in desperation, turn to any party that claims they can get the property owner out of their financial jam and save the owner's home. Unfortunately, what could happen instead is that your deed ends up in the hand of the scammer and you end up out in the street. In many cases, homeowners willingly sign over their deeds for the promise of a foreclosure rescue that never comes.

According to the Ohio Department of Commerce, scammers may pull a number of tricks to get you to sign over the deed to your house. These tactics involve differing levels of deception, but the end result is always to the detriment of the homeowner. Such schemes may include the following:

Can I fight a debt that wasn’t mine?

It can be difficult to make ends meet each month without the added stress of extra debt. You might be juggling credit card bills, medical payments and student loan debt, which can make it especially frustrating if you start receiving mail and phone calls for something you didn’t spend money on. Should you be forced to endure creditor harassment or make payments on a debt that isn’t yours? This is not an uncommon occurrence for residents of Ohio and elsewhere, so you may be interested in learning how to deal with this issue.

According to the U.S. Federal Trade Commission, consumers are protected by law from creditors harassing them or wrongfully claiming they owe money. You might be getting bills for an unfamiliar debt because you have the same name or lived at the same address as someone else, or you might have been the target of identity theft. It is also possible creditors are attempting to collect a deceased family member’s debt and hoping you will pay, rather than contest the charges.

Why is credit counseling required prior to bankruptcy?

If you are like most in Dayton who struggle with debt, the prospect of having to seek bankruptcy protection may not be attractive, yet also may appear to be your only option if you hope to get a handle on your financial situation again. Your concerns might come from an assumption that the government is more than willing to offer you bankruptcy protection as a way out, when in reality, the bankruptcy code is designed to offer you several options to deal with your debt. 

Why else, then, would it be a requirement that you go through credit counseling prior to filing for bankruptcy? Per Section 521(b) of the Federal Bankruptcy Code, you must submit a certificate showing that you have completed credit counseling along with the other required paperwork when first filing for bankruptcy. A credit counseling agency can develop a repayment plan that shows how you might be able to repay your creditors without filing for bankruptcy. In some cases (depending on the assets you have available to you), this may only serve to reaffirm the need for you to file for bankruptcy. However, it may also reveal that repayment is indeed a reasonable option. 

3 surprising reasons you may go into debt

Debt is one of those things that can creep up on you. While there are some obvious culprits that may send you into sudden debt, such as a medical emergency or unemployment, there are plenty of scenarios that can trap you into an overwhelming money problem

Before you know it, you may be struggling to pay the bills when you do not even see it coming. Here are a few surprising causes of debt you should not overlook. 

Important tax tips for bankruptcy filers

Filing for bankruptcy is one method many people across Ohio use to help themselves regain their financial footing, but there are certain behaviors and lifestyle changes you will need to make after doing so. In addition to watching your spending and making sure to stay on top of all your bills, you will also need to consider how filing for bankruptcy will affect you, come tax time. At Kennel Zeigler LLC, we have a firm understanding of how filing for bankruptcy can impact your taxes, and we have helped many clients navigate their way through this and similar matters.

According to TurboTax, one of the first things you may want to think about doing if you believe a bankruptcy filing is in your future is file your taxes before moving forward with your bankruptcy case. If it is too late to do so, it is imperative that you maintain a copy of all your tax records, and you should also be able to clearly explain and outline how you used any money you got as a tax refund when questioned.

What steps can you take to reduce the chances of foreclosure?

As an Ohio homeowner, you may take tremendous pride in your home, as it is likely the place you raise children, make memories and otherwise spend your free time. If, like so many others, however, you are struggling to keep up with your mortgage payments, you may have very valid concerns about whether you may lose the place you and your family call home. While, ultimately, whether you will lose your house in a foreclosure will depend on a number of different factors, there are several steps you can take ahead of time to reduce the chances of this happening.

According to This Old House, one of the most important things to do when you have concerns about foreclosure is to avoid waiting around until your situation becomes dire. Once you become upside-down on your home, your options become limited, so your best bet when facing the threat of foreclosure is to act quickly. With this is mind, one thing you can do as soon as you start struggling with mortgage payments is contact your mortgage lender and discuss whether you have any options.

Avoid certain credit cards following bankruptcy

Bankruptcy has a significant effect on one’s credit score, as well as their ability to apply for credit cards, home loans and other important financial support. Once a creditor spots a bankruptcy on an applicant’s record, they may be alerted to the fact that he or she has trouble meeting their financial obligations. There are ways that debtors can rebuild their credit following a bankruptcy, including applying for subprime credit cards. These types of credit cards are designed for people who struggle with bankruptcy, as they will approve those who have a bankruptcy on their record. Experts warn people who apply for these credit cards that high interest rates and fees could lead to more financial trouble.

Subprime credit card lenders approve people with poor credit, below 600, and attempt to help them rebuild their credit score by giving them a chance to charge and repay their balance. As a way to minimize their risk, however, subprime specialist issuers must charge high interest rates, processing fees, annual fees, maintenance fees and authorized user fees. This can put the applicant in danger of becoming indebted once again. CBS News reported that paying off a subprime credit card takes on average, 70 percent longer than paying off a traditional credit card because of all of these added fees and charges. In addition, the agreements can be difficult to read and understand.

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