Chapter 7 Bankruptcy in Ohio
Unlike a Chapter 13 bankruptcy filing, which requires a debtor to repay their debt, Chapter 7 bankruptcies provide a debtor the opportunity to eliminate their debt and receive a fresh start. A debtor filing for Chapter 7 typically does not have the necessary disposable income to repay their debts. Although Chapter 7 may sound like a better option since it essentially discharges debt and requires no repayment, it does require the liquidation of all of the debtor’s non-exempt property, which will be distributed among the creditors.
Chapter 7 Bankruptcy Process
Chapter 7 is the most common type of bankruptcy filing and is often the quickest. The Chapter 7 Bankruptcy process generally takes 4-6 months. The filing fee for a Chapter 7 bankruptcy is $306. There are also attorney fees and administrative costs in addition to the $306.00. Call our office for a free initial consultation where you will get a fee quote. The debtor is typically only required to make one appearance in court and required to complete two credit counseling classes. To manage the entire process, a trustee is assigned will collect all of the debtor’s non-exempt assets, sell them and distribute the proceeds to the creditors. One of the biggest misconceptions with regards to Chapter 7 Bankruptcy is that debtors lose all of their personal and real property. If there is no equity in an individual’s assets that can be liquidated by the Trustee, most debtors retain ownership of their assets after discharge of their debts.
By filing for bankruptcy, a debtor is technically placing the property they own and the debts owed into the possession of the bankruptcy court. The debtor is not permitted to sell or give away any of the property they own once the bankruptcy is filed, or repay pre-filing debts, without the court’s consent. A day or two after the bankruptcy is filed, the court will schedule a creditors meeting, which will include the debtor and all the creditors listed in the bankruptcy papers.
The bankruptcy court-appointed trustee will facilitate the meeting at which the debtor may be inquired about the bankruptcy and the papers filed. Following the creditors meeting, if the trustee determines that the debtor has some non-exempt property, they may be required to surrender that property or provide the trustee with its equivalent value in cash in lieu of the item. Items of little value may be retained by the debtor, although not exempt; however, those items that may be protected vary from state to state. If a debtor has designated a specific property as collateral for a loan, the loan is called a secured debt.
Chapter 7 Bankruptcy Collateral
The most common examples of collateral are items such as houses and vehicles. If a debtor is behind on payments, the creditor can ask to have the automatic stay lifted in order to repossess or foreclose on the property. If the debtor’s payments are current, they may often keep the property and continue to make payments as before, unless the property has enough equity to justify its sale by the trustee. If a creditor obtained a court judgment against the debtor and recorded a lien against property because of an unpaid debt, that debt is also secured. The debtor may be able to discharge the lien in bankruptcy. Upon completion of the Chapter 7 Bankruptcy process, a debtor is discharged of all debts, except:
- Non-dischargeable debts, such as child support, tax debts, student loans
- Debts the court has declared non-dischargeable due to creditor objection, including those incurred by means of fraud or malicious acts.
Chapter 7 Filing Limits
If a person filed a Chapter 7 discharge or completed a Chapter 13 bankruptcy repayment plan in the previous eight years, that individual is ineligible to file a for a Chapter 7 Bankruptcy. Under bankruptcy laws, debtors whose incomes are higher than the median income for a family of their size in the state where domiciled may not be permitted to file for Chapter 7. If a person’s disposable income, less certain permitted expenses, would allow him/her to repay a portion of their unsecured debt over a five-year repayment period, the filing will not be permitted.
The Luftman, Heck and Associates Advantage
We at Luftman, Heck and Associates understand the emotional and financial strains of financial debt and the impact it can have on other areas of your life. We will be with you at every step of your bankruptcy and help ensure that you receive the fairness you deserve throughout your bankruptcy filing. The attorneys at our law firms in Columbus and Cincinnati Ohio have great experience guiding clients through bankruptcy filings and will always strive for the best possible outcome on your behalf.
If it is determined that Chapter 7 bankruptcy is the best option for you, the attorney’s at Luftman, Heck & Associates can help you prepare and file the required Chapter 7 forms. Although the process may appear intimidating, our staff will walk you through the process and prepare the required lists detailing:
- Your outstanding debts
- Current income and monthly living expenses
- Your assets
- Assets a debtor is allowed to keep through the bankruptcy process
- Assets sold or given away during the previous four years
If you or a loved one are in need of legal representation for a bankruptcy filing and interested in learning more about Luftman, Heck and Associates LLP, please fill out a contact form or begin by completing the Ohio Bankruptcy Client Questionnaire. A member of the law firm will contact you directly to discuss your case in more detail and provide additional information about our bankruptcy filing services.