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Cincinnati Bankruptcy Law Blog

Computer contents may void this company's bankruptcy protection

Business owners in Ohio who are experiencing financial difficulties have likely explored their options under the protection of the U.S. Bankruptcy Code. Those who want to continue operating their business while reorganizing their debts can file a Chapter 11 bankruptcy. However, if all business operations must cease, Chapter 7 will discharge most debts and liquidate assets to pay creditors. As soon as a bankruptcy filing is recorded, an automatic stay will put a halt on any legal actions already started against the business owner.

A wine supplying company owner in another state is seeking such protecting for his business that apparently has liabilities of approximately $70 million and assets of only $7 million. There are currently four pending fraud lawsuits against the company, and if the Chapter 7 bankruptcy petition is successful, these claims will be cancelled. However, the bankruptcy trustee is investigating the company to determine what happened to the funds that were paid by customers for wines that were never delivered.

Considering small business bankruptcy? Get informed before filing

When a small business owner in Ohio faces financial difficulties, options under the U.S. Bankruptcy Code may be considered. However, it is important to gain knowledge about the various small business bankruptcy options. Without the necessary information, a business owner may falter in making important decisions about the future of his or her business.

If a sole proprietor of a small business files for Chapter 7 bankruptcy in his or her personal capacity, the business is not in jeopardy. However, if bankruptcy is filed and the business is a corporation, partnership or limited liability company, the business will be closed because it would be considered a separate legal entity. In such a case, the bankruptcy trustee would determine which of the business's assets must be liquidated to pay creditors. However, since a sole proprietorship's assets belong to the owner, he or she can file for personal bankruptcy and then would be able to keep the business.

What steps can be taken to prevent foreclosure?

If an Ohio home owner's financial situation deteriorates to a level at which mortgage obligations can no longer be met, there are steps that can be taken to remedy the situation. Facing foreclosure is naturally stressful, and all options must be considered. Support is available from different sources, including foreclosure prevention counselors, the mortgage holder, the government and the bankruptcy court.

Although selling the house may be the best solution, the mortgage holder will remain responsible for the balance if the property's value is lower than the mortgage amount. Foreclosure prevention counselors can assess the situation and determine whether a refinance plan or loan modification is possible and offer to negotiate with lenders. However, the mortgage holder will be exposed to the many scammers that exist in this field. Lenders are sometimes willing to accommodate borrowers by temporary reduction or suspension of mortgage payments, loan modifications, refinancing or reinstatement that will allow the payment of missed installments.

Debt collector: FTC smacks down on abusive practices

The Federal Trade Commission protects consumers against harassment by debt collection companies, here in Ohio and across the country. The agency recently took action against four companies that engaged in deceptive methods to collect debts that were, in some cases, nonexistent. A typical tactic of a debt collector involves intimidation, which can come in many forms.

The FTC reports that the debt collectors of one business -- operating under several different names -- collected $4 million by making consumers believe they were law enforcement officials, even though they could not provide proof that any debts were owed. Workers with another company reportedly obtained information about consumers who had only made inquiries about payday loans. They sought reimbursement of nonexistent loans and even told family members, co-workers and employers of their victims about the supposed debts. Another company copied the stationery of a municipal court and used letters and postcards to threaten people with arrest or jail time, impoundment of their vehicles and the inability to renew driver's licenses if fines were not paid.

What happens to a second mortgage in Chapter 13 bankruptcy?

A homeowner in Ohio might find it difficult to sell a house that is burdened with a second mortgage. To transfer the title of a property to a buyer, it has to be free of any encumbrances. The holder of the second mortgage has a lien on the house that serves as security for the loan. Although personal bankruptcy may be a solution, property owners may want to explore other options before filing for bankruptcy.

In rare circumstances, it may be possible to negotiate a lower payoff amount with the holder of the second mortgage. An arrangement by which a portion of the money is paid at closing of the sale and the balance over an agreed upon period may be allowed. Negotiations may also result in the first mortgage holder agreeing to grant the second mortgage holder a portion of the proceeds rather than getting nothing in the event the sale is not completed.

Debt collection action can be avoided on medical debts

New rules were announced last year for the manner in which the three main credit reporting agencies (CRAs) will handle unpaid medical debts. The CRAs are still in the process of implementing the new rules, and the overhauling of their practices will reportedly continue through 2017. One of the most significant changes is the fact that consumers nationwide, including here in Ohio, will have 180 days to resolve unpaid medical debts before it will be shown on their credit reports, and before it is handed over for debt collection.

That grace period of six months will enable consumers to take steps to address any unresolved issues related to medical debt. It is not uncommon for clerical errors to occur, and each bill can be scrutinized to ensure recognition of the provider and the treatment dates. Itemized billing can be requested to check every entry if the amount seems too high. Any disputes or errors are best addressed without delay, to ensure solution within the grace period.

Personal bankruptcy may lead to fresh financial start

Ohio consumers who find themselves overwhelmed by credit card debt may be exploring remedies for the situation. Under the Bankruptcy Code, protection is offered that is not available in any of the many plans that may provide debt relief. The bottom line is that the only way in which credit card debt can be cleared is by paying it off, and with interest and late-payment fees ever accruing, this is a long-term option, unless personal bankruptcy is chosen.

Personal bankruptcy may provide debt relief and offer a consumer a fresh financial start. Depending on the consumer's income, expenses, assets and liabilities, he or she may qualify for either Chapter 7 or Chapter 13 bankruptcy. Individuals without a regular income may qualify to file for Chapter 7 under which unsecured debt such as credit card debt can be discharged. In exchange, though, some assets may have to be liquidated to obtain funds for paying creditors. This option may only be used once in every eight years.

Bankruptcy: Small businesses can overcome debt problems

Some small business owners in Ohio who have encountered unexpected financial difficulties may be exploring possible remedies. Fortunately there are several options under the Bankruptcy Code that might allow a business to continue rather than just shutting its doors. Careful consideration is required before these important decisions are made.

If a sole owner of a small enterprise wants to cease business operations, Chapter 7 bankruptcy may be suitable because most business debts and unsecured personal debt can be eliminated in exchange for the liquidation of the company and personal assets. The proceeds from the sale of the assets will be distributed by a court-appointed trustee among creditors. However, it may affect the individual's credit rating for several years to come.

Your retirement is safe when filing for bankruptcy

Filing for bankruptcy is a big choice that many couples and individuals are hesitant to make. Though Chapter 13 or Chapter 7 bankruptcy can be used as a tool to positively benefit a financial crisis, taking the leap is intimidating. Nevertheless, thousands of people who are living in the area of Cincinnati, Ohio, file for bankruptcy each day. If you are like most of these individuals and are considering bankruptcy, you naturally have many questions. One of the most common concerns that people have when filing for bankruptcy is the future of their retirement savings.

But there’s good news! Your retirement savings—or 401(k)—is protected in the event that you go through with filing Chapter 7 or Chapter 13 bankruptcy. Even if the funds in your retirement account far outweigh your total debt, not one penny can be taken to pay off your debts. Due to bankruptcy exemptions, your debts could be completely consolidated without you paying towards them at all.

When should I look for in a bankruptcy attorney?

Let's say that the evidence has been stacking up lately that suggests you need to talk with a bankruptcy lawyer: you've been juggling some or even many of your bills, trying to stay one step ahead of having your electricity, telephone and water shut off. You've been "paying off" credit card balances by opening new credit card accounts and transferring the old card's balance to the new card, and you're only able to make the minimum payment on the balances that you have. You've borrowed all the money you can from your relatives. When the phone rings, you hesitate to answer it. In a worst-case scenario, some of your creditors may have already begun taking legal action against you.

In short, the question is no longer "whether" you should contemplate personal bankruptcy as an option; the question has become what you should be looking for in such an attorney. Here are some guidelines to use when deciding which bankruptcy law firm to consider.

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