Dayton Bankruptcy Law Blog

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.

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:

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. 

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.