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Dayton Bankruptcy Law Blog

What 5 things should you do after bankruptcy?

Now that your bankruptcy period has ended in Ohio, you likely want to reestablish your credit as quickly as possible. How you go about doing this, however, can make all the difference.

Here, per, are the five steps — in order — that you should take.

What are the benefits of Chapter 13 bankruptcy?

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.

How getting a divorce can lead to bankruptcy

Getting a divorce is not just emotionally draining; it can also significantly strain your finances. According to research by the Center for Economic Studies, divorce is one of the leading causes of bankruptcy, next to job loss and medical bills.

Ending your marriage may overwhelm you with debt and more financial stressors than before. If this happens, filing for bankruptcy may be a good way to start over. Here are some of the top reasons why breaking up with your spouse can lead you to bankruptcy.

Medical expenses: A major cause of bankruptcy

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.

What can bankruptcy’s automatic stay protect you against?

As an Ohio resident who is facing mounting bills that have become more than you can reasonably manage, you may be wondering what you can do to escape the seemingly constant barrage of phone calls from creditors and debt collectors. You may, too, have heard that bankruptcy’s automatic stay period can give you at least temporary relief from some of these communications, but you may not fully understand what happens during this period.

According to LendingTree, the automatic stay is something the court orders once you begin bankruptcy proceedings, and it prevents your creditors from trying to collect on your debts for a certain period. Typically, the automatic stay period lasts somewhere between three and four months, and there are certain restrictions governing who can contact you for money or payments during this time. So, what, exactly, can bankruptcy’s automatic stay temporarily protect you against?

What assets do I stand to lose in a bankruptcy?

If you are considering filing for bankruptcy to relieve your insurmountable debt, you have undoubtedly heard the horror stories. Your well-meaning friends and family members may have misinformed you that you will lose everything in a bankruptcy. You and other Ohio residents may find some peace of mind after learning about exempt and non-exempt property in a bankruptcy.

As FindLaw explains, the bankruptcy trustee will use non-exempt assets to repay creditors during a personal bankruptcy. What exactly they liquidate for this purpose depends on what you have. First, you should understand that exempt property – that which you are allowed to keep – includes items deemed necessary for modern life and for remaining employed. This can include your car, clothing, household goods, furniture, tools of your trade and appliances. Funds you receive from public benefits, pensions and personal injury damages may also be exempt.

3 ways to cope with your bankruptcy emotions

As you know, living can be extraordinarily expensive. If you have a mortgage, a car payment, student loans, consumer debt and outstanding medical bills, your financial liabilities may be downright crippling. Fortunately, there may be a way for you to regain your financial freedom. 

Filing for bankruptcy is often an effective way to manage debt. If you have more bills than you can reasonably pay, considering bankruptcy protection may be right for you. Of course, bankruptcy often comes with a variety of emotions. While it is perfectly normal to feel anxiety, sadness or even shame, you do not want your feelings to derail you from making smart decisions. Here are three effective ways to cope with your bankruptcy emotions: 

Has the rate of foreclosure slowed?

If you are like most people in Ohio, you probably hear others reference the recession that happened slightly more than a decade ago as though it is completely gone and almost forgotten. Instead, today many people are more likely to talk about the economy as being strong and growing as evidenced by a healthy housing market. This, however, does not mean that you or others cannot find yourself facing financial difficulties. 

In fact, many people continue to struggle to the point where they are in jeopardy of losing their homes. According to The Title Report, 58,500 filings to foreclose on properties were recorded in March 2019 alone. This represents a decline by 21% over the same month last year but an increase by seven percent from the previous month.

Are there ways to avoid foreclosure?

If you become unable to make the mortgage payments on your Ohio home, you may think that foreclosure is the only option. You may worry about losing your home and earning negative feedback on your credit history. However, you may be able to avoid foreclosure. There are several potential solutions that may help you stay in your home and/or avoid credit problems.

According to FindLaw, it is essential to start looking for a solution to your mortgage issue as soon as possible. If you wait too long or miss too many payments, you may become ineligible for some types of assistance. You may want to start by speaking with a foreclosure prevention counselor. A counselor may encourage you to contact your lender directly or to apply for a government assistance program. Either of these options may allow you to refinance or modify your loan.

How do you file for bankruptcy in Ohio?

Your bankruptcy will probably start with questions and end with a clearer financial future. Do you need to file for Chapter 7 or Chapter 13? Do you have assets you could sell off before you begin the bankruptcy process? Have you paid debts that the court could reclaim during the procedure? These are some of the things you might want to ask yourself before you begin the bankruptcy process in Ohio.

Essentially, the first step of bankruptcy is developing a strategy. Your plan will probably include non-bankruptcy tactics to ensure the formal process will be as effective as possible in promoting the long-term stabilization of your finances. Here are some of the considerations you might make while taking your first steps.

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