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Dayton Bankruptcy Law Blog

Completing your Ohio bankruptcy process successfully

In many situations, bankruptcy can be more of a help than a hindrance. As people recognize this, the use of bankruptcy to deal with financial issues is becoming increasingly popular.

It is important to understand the procedure fully in order to handle it successfully. In order to complete the bankruptcy process in Ohio, there are a few key elements that a filer must address.

Do you qualify for Chapter 7 bankruptcy?

If you have considered filing for bankruptcy, you are certainly not alone. In 2017, more than 767,700 bankruptcy cases were filed, according to U.S. Courts. Of those cases, 472,135 were Chapter 7 bankruptcies. Chapter 7, otherwise referred to as liquidation bankruptcy, is designed to wipe away most of your lingering debts, including credit card debts, medical expenses, doctors’ bills and mortgage payments. Not everyone, however, qualifies to file for Chapter 7. There are a few factors that must be met in order to file for this type of bankruptcy.

First, your income cannot exceed the state median income. In Ohio, the state median for one earner is $48,596 and for a family of two it is $60,190. If your income exceeds this amount, you may be able to pass a means test. This looks at your average income over the past five years and compares it to your debt and expenses. You cannot file for bankruptcy if you have filed a case less than 180 days prior and had that case dismissed. Next, you must take a credit counseling course within 180 days of filing for bankruptcy. This course ensures that you understand what is involved in filing for bankruptcy, the effect it will have on your credit, and how to manage your money once you begin rebuilding your credit.  

Tips for rebuilding credit after bankruptcy

As an Ohio resident who recently filed for bankruptcy, you may be working to get your finances back in order in the aftermath of doing so, and part of this process will entail rebuilding your credit. At Kennel Zeigler LLC, we recognize that rebuilding credit is an important part of the bankruptcy process, and we have helped many clients facing similar circumstances work to navigate this and other bankruptcy-related issues.

According to Nerdwallet, your credit score will almost certainly take a hit after bankruptcy, but it may have been in poor shape anyway if you made the decision to file in the first place. A Chapter 7 filing may have given you the clean financial slate you needed to start over, so now it is time to rebuild your credit and continue getting back on top of your finances. So, where should you start?

What might happen if you walk away from your mortgage?

Life can be extremely difficult and stressful after you receive notice that a foreclosure is imminent. On top of your other financial concerns, you now have to worry about keeping your home. If you are considering just walking away from your home, you are not alone. Many other residents of Ohio and elsewhere have done just that. But what happens when you walk away?

One of two things are likely to occur after you abandon your mortgage. Either your bank will repossess the home and complete the foreclosure, or it will fail to complete the process and let the property languish. The latter is known as a zombie foreclosure and, according to the Dayton Daily News, was a common occurrence in Ohio as late as 2015. That year, Ohio was one of the top states for the amount of zombie homes left to fester in neighborhoods across the country.

What is an automatic stay in a bankruptcy?

If you are one of the many people in America 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. 

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