Minnillo & Jenkins
Cincinnati 513-823-9148 [ Hyde Park, Eastgate, Fairfield, Covington ] email Us for answers Email

Cincinnati Bankruptcy Law Blog

Business debt lead to sports distributor's Chapter 11 filing

A sporting goods distributor that has several stores in Ohio -- some in Cincinnati -- has announced its recent filing for Chapter 11 bankruptcy. It announced that liquidation sales would immediately commence at all 68 its stores nationwide. This came after the company was unable to reach agreements related to business debt in out-of-court negotiations.

According to a spokesperson for MC Sports, it suffered similar hardships to those reported by others in the same industry, namely increased competition from the e-commerce industry, direct sales and more. The company is moving its focus away from only sports apparel, footwear and other sports gear. Fewer, larger stores will include outdoor sports categories such as fishing, hunting and more.

Understanding bankruptcy and your credit score

Many individuals and married couples in Ohio carry significant balances on their credit cards. Often, consumers try to manage overwhelming medical bills, credit card payments and other forms unsecured debts by making the minimum monthly payments. If you can keep up with these payments without falling further in debt, all may be well.

However, when minimum payments can no longer be serviced, there may be a strong temptation to tap into home equity or retirement accounts to get back on track. There are many reasons consumers continue to struggle with unmanageable debt. One common reason is the fear that seeking debt-relief assistance may adversely impact credit scores.

Chapter 7 bankruptcy: Will you lose your car?

Unfortunately, anyone can experience financial difficulties. When an Ohio resident faces financial challenges that seem overwhelming, he or she might consider bankruptcy. However, if that person needs a car to earn a living, there may be a fear of losing it in bankruptcy. While Chapter 7 bankruptcy liquidates most assets, there are steps that a consumer can take to maintain ownership of a car.

The options will depend on whether the filer still owes money on the vehicle. The state has a vehicle exemption amount, and if a paid-off car's value is below that amount, the bankruptcy court may allow the consumer to keep the vehicle. However, if the value exceeds the exemption amount, the court may order the surrender of the car. If there is an outstanding balance of the car loan, the owner's choices are to continue payments or to give it back to the loan provider and have no further liability.

Business debt: The duties of a Chapter 11 bankruptcy trustee

When small business owners in Ohio go through difficult times, they may be looking at options to relieve the pressure and get back on track. Business debt can be overwhelming, and the appropriate step might be to seek professional advice. A Chapter 11 bankruptcy filing may be a suitable solution, and the business may be saved under the supervision of a court-appointed trustee.

The U.S. Trustee's duties include the review of the requests for relief and tailoring the relief according to the circumstances. The requests may include professional services, emergency financing and payments to individual suppliers. The trustee must also establish committees to represent creditor groups such as unsecured creditors, equity security holders or bondholders and more. He or she will then organize and oversee the seven to 15 committee members -- typically accountants and attorneys representing creditors.

Bankruptcy or credit card debt forgiveness: What's better?

Ohio consumers with overwhelming credit card debt may have questions about the Credit Card Debt Forgiveness Act, particularly if they are unsure whether it will be a suitable remedy for their circumstances. Pursuing this as a debt relief option may be best for consumers who have debts outstanding on multiple credit cards, and want to get reduced monthly payments. It is also a method of avoiding bankruptcy but comes with adverse consequences.

Typically, the only time a credit card company will consider forgiving a portion of a cardholder's debt is when it suspects the client may file for bankruptcy if some of the debt is not forgiven. By forgiving a portion, the lender may get some of the money owed, while bankruptcy will usually discharge the entire amount, leaving the credit card company with nothing.  However, any forgiven debt over $600 will be taxable because the IRS will treat it as income.

Foreclosure can be halted even if auction date is looming

Adverse financial circumstances -- often caused by employment loss or medical emergencies -- can have severe consequences. Homeowners may even face foreclosure. If an Ohio homeowner is notified of imminent foreclosure, he or she may have questions about the possibility of keeping the home, and what can be done with an auction date looming.

Foreclosures can be either judicial or nonjudicial; however, nonjudicial foreclosures are not typically available under Ohio laws. In Ohio, the court enters a judicial order to foreclose, and a subsequent sheriffs sale is scheduled to sell the property at auction. Once that date is set, time to save the home is limited -- but remedies are available.

The desired result may not follow a DIY bankruptcy filing

With the availability of online options and do-it-yourself instructions for just about every procedure, Ohio consumers who are experiencing financial problems may choose to search for remedies online. Online instructions may not cover all eventualities, and for a process such as a bankruptcy filing, obstacles may arise that need professional assistance. A skilled bankruptcy attorney can explain the pros and cons of all debt relief options and compare them with those of personal bankruptcy.

If the consumer decides to file for bankruptcy, legal counsel can help with filling out complicated forms that require financial information in very specific formats. There will be creditor's meetings at which tricky questions might be asked, and the presence of an attorney can be helpful. He or she can explain all the bankruptcy rules and their intricacies that online instructions might not include. Only full understanding of all the details about Chapter 7 and Chapter 13 bankruptcy can allow the consumer to make informed choices.

Bankruptcy: Which debts qualify as priority debts?

When the debts become overwhelming, Ohio consumers may have questions about their options. While bankruptcy is likely the most appropriate way to achieve financial relief, some so-called priority debts are not dischargeable. These include secured debts such as car loans and mortgages that are secured by property that creditors can repossess to cover unpaid amounts. In Chapter 13, payments can continue as part of court-approved restructured payment plan. However, unless a Chapter 7 filer can catch up with unpaid amounts, and maintain payments after completing the bankruptcy, those assets may be liquidated.

Other debts that the liquidation of assets will cover include any fees outstanding to government units such as penalties, speeding fines, vehicle registration and tax penalties. Government funded student loans are not dischargeable, with some exceptions, though if the consumer can prove undue hardship -- which is extremely difficult to establish -- the loan might be discharged. Also, an individual must repay any overpaid government benefits such as unemployment. If the person cannot pay it back, it will become a debt not subject to discharge. When it comes to a loan from a 401(k), that is actually a debt to the individual, and Chapter 7 does not provide for its forgiveness.

Bankruptcy vs. other debt relief options

The tremendous amount of credit card debt in the country is not only a national problem, but it also affects the lives of many consumers in Ohio. While bankruptcy is a viable option, consumers may want to compare the pros and cons of it with other debt relief options. The most appropriate first step is to make a list of creditors and the amounts owed to them.

To make an informed choice, a consumer must learn the unique aspects of each option. Some require the consumer to take out a loan, and homeownership might be necessary for security. Solutions exist for those whose debts are still manageable, and for those with overwhelming debt, more drastic and aggressive remedies are available.

Bankruptcy vs. debt negotiation -- myths and truths

Ohio consumers who have accumulated levels of credit card debt with which they feel uncomfortable may be looking at the available debt negotiation options. While some possibilities can be useful, the myths that surround this subject makes it difficult to make informed decisions. After considering all the choices, it may be wise to compare those with the protection offered by the federal Bankruptcy Code.

It is a myth that all debt negotiation companies are dubious; many are reputable and committed to relieving consumers' debt problems. Some belief that debt negotiation will remove all debt while taxes; however, alimony, child support and certain other debts cannot be resolved in this process. Furthermore, it is also a myth that debt negotiation will remove negative reports from a person's credit record.

Contact Us

Office Visit Our Family Law Site