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Cincinnati Bankruptcy Law Blog

Ohio small business bankruptcy risk caused by unsound loans

Small business owners in Hamilton County could be at risk of a national trend involving business loans. Unless you own a business with a strong, consistent cash flow and years of financial statements to offer to lenders, getting a business loan from a bank can be a daunting experience that frequently ends with a rejection.

Businesses across the country have been brought to the brink of financial ruin by creditors who at first came to them with offers of loans to help them. Whether to improve cash flow or to expand market share, an infusion of money into a small business can look like a great opportunity. The problem is that too much debt or debt with high interest rates and unfavorable credit terms can leave a business struggling.

Are you facing foreclosure?

Those who are in enough financial trouble to be contemplating bankruptcy will, if they are homeowners, often also find themselves having to think about the prospect of what it would be like to lose their homes to foreclosure. Your mortgage payment is typically the largest of your bills, and when you are already juggling bills it can be like trying to juggle a bowling ball.

There is a saying that, "Desperate times call for desperate measures." But the trouble is, when you feel like your back is against the wall, that does not put you into an empowered frame of mind when you are making critical choices about your finances that can have ripple effects on your job and your loved ones. What you need is a chance to consider your options in a calm and orderly manner, so you can make the best possible decisions based on all of the options available to you – some of which you may not even be aware of.

Types of bankruptcy for small businesses

The decision to file for bankruptcy is a difficult one, particularly for small business owners. When a business owner does make the decision to declare bankruptcy, the owner must then choose the type of bankruptcy to file. There are a few different types of bankruptcy for businesses, and each type has pros and cons.

Chapter 7 bankruptcy, or liquidation bankruptcy, is the most common. It is best for businesses that do not have substantial assets and that have no hope of repaying the debts. Through Chapter 7 bankruptcy, your business assets will be liquidated or sold to pay off outstanding debts. Any debts that are not covered by the assets will then be discharged. 

“Zombie debt” can eat away at debtor efforts to improve credit

“Night of the Living Dead,” “Dawn of the Dead” “The Walking Dead,” what do these have in common with debt collection?

Irritating zombies. Some consumers’ credit ratings are being consumed by zombie debt. And one U.S. Senator from Ohio wants to do something about it.

Hiding bankruptcy from your spouse

In Ohio, it is not uncommon for one spouse to rack up massive debts without their partner’s knowledge. For a while, you may be able to make manageable payments, but after a while, it becomes evident you cannot pay back the debt on your own. As such, you may be considering filing for bankruptcy. Yet, you do not want your partner included in the bankruptcy, either to protect their assets, because you are ashamed or for some other reason. Legally, it is possible to file for bankruptcy without any involvement from your spouse.

This is not to say your spouse will not be impacted or will be ignorant to the bankruptcy. For one, filing for bankruptcy generally involves a variety of legal documents being sent to your home, and many attorney visits. As such, they will likely begin to suspect that something is wrong.

Boomers and older Americans still owe on mortgages, unpaid bills

Over the last five decades, many characteristics have been used to describe Baby Boomers, those born between 1946-1964. The youngest Boomers are now in their mid-fifties, the oldest in their seventies. And one thing that is a common thread among many of them, in Ohio and across the country, is that they still have significant debt.

A recent Pew Charitable Trusts report shows that eight out of ten Boomers have some type of debt. Of those, nearly half still owe on a mortgage.  Perhaps more surprising than that statistic, however, is that members of the generation before the Boomers, born between 1928 and 1945, also still have mortgage debt. Almost one-third of those, currently in their seventies through nineties, still owe an average of $76,000 on a mortgage.

What do I get to keep if I file for Chapter 7 bankruptcy?

Chapter 7 bankruptcy is touted as a “fresh start” that allows someone to erase a significant portion of debt that probably cannot be paid based upon the debtor’s current income and financial circumstances.

In fairness to creditors, anything of value that the debtor has is turned over to the court to sell, with the proceeds used to pay off eligible debts. This fact makes many people who would otherwise consider bankruptcy to not do so out of fear of losing things like cars or even their home.

How different types of foreclosure may affect you

Foreclosure is the process by which a lender, such as a bank or mortgage company, takes possession of a property when the borrower defaults on the mortgage. While this may seem like a simple concept, many people do not realize there are different types of foreclosures. There are three main types of foreclosure: judicial, non-judicial, and strict. Judicial foreclosure is the most common. It is also the only type of foreclosure used in Ohio.

Under Ohio law, a lender must get a court order to foreclose on your property. The judicial foreclosure process requires the lender to file a lawsuit in court. The lender must notify all relevant parties of the action. You, as the borrower, have the opportunity to contest the foreclosure. After you receive notice of the lawsuit, you can respond either by making a payment or by raising any objections or defenses. If the lender is ultimately successful on the foreclosure claim, the court will issue an order allowing the lender to begin the process of selling your home. 

Why is bankruptcy federal law?

Anyone familiar with the American system of law will be familiar with the two-tier arrangement of federal and state laws. In some areas the federal government has determined it necessary to “pre-empt the field” when it comes to a given law, meaning that federal law is to govern instead of state laws. The U.S. Bankruptcy Code is one such law.

The main purpose of making bankruptcy a federal law instead of allowing each state to enact and maintain its own bankruptcy laws is for uniformity in how the law works. Especially given the ability of companies and individuals to travel and to carry out transactions in a number of different states, discrepancies between states might contribute to “forum shopping” among states looking for the most advantageous treatment.

How wage garnishments work

When consumers in Ohio fall behind on their bills, one route creditors can take to recover the debt is through wage garnishment. This may be a term you have heard on television or in movies, but how does it actually work? Creditors cannot simply take money from you. There is a process that they must follow.

Whether you are a month or a year behind on your bills, creditors must schedule a court hearing for wage garnishment. You will be notified of the time and date; this is your time to state your case and explain why your wages should not be touched. If the courts side with you, creditors will have to resort to other means of debt collection. But if the courts find wage garnishment to be right, your employer will be notified to withhold a portion of your paycheck and instructions for sending it to the creditor.

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