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Cincinnati Bankruptcy Law Blog

Personal bankruptcy can provide a fresh financial start

Filing for bankruptcy in Ohio is a complicated process and may be best navigated with the guidance of an experienced bankruptcy attorney. He or she can explain the pros and cons of the different types of bankruptcies -- called chapters. Individuals typically have to do a means test to determine whether they qualify for Chapter 7 or Chapter 13 bankruptcy. Chapter 7 brings debt relief within months, while Chapter 13 takes between three and five years.

Chapter 13 bankruptcy is suitable for individuals who have fallen behind on car or mortgage payments and need extended time to pay it off. Most of their debts may be non-exempt such as child support or student loans, and they may not want to risk losing assets such as a car or jewelry. This chapter involves drawing up a court-approved reorganized payment plan to settle debts over a period of three to five years.

Filing for bankruptcy may be a complicated process

Job loss is not something wished upon anybody, and the financial stumbling blocks may be overwhelming. Even if expenses are cut to the absolute minimum, with no income, there may be no money to cover debt obligations. The U.S. Bankruptcy Code may offer an Ohio consumer the opportunity to have some debts discharged, allowing him or her to regain financial stability. Filing for bankruptcy, however, is not an option to choose without being fully informed of the pros and cons.

All options must be explored, and if bankruptcy is the choice, a means test must be completed that will compare the individual's income and debts to determine whether Chapter 13 or Chapter 7 would be the appropriate solution. All financial information must be gathered, including assets, income records over the past six months, all outstanding debts and more. A credit counseling program must be attended in the six months prior to filing for bankruptcy.

Personal bankruptcy can put a stop to foreclosure

Foreclosure is not something that is wished upon any property owner, and Ohio homeowners may not realize that lenders do not usually start such drastic actions for a single late payment. A late payment notice may be sent, and if it remains unpaid, the mortgage holder may try to make contact to arrange negotiations to reach an agreement that may help the homeowner to bring payments current. Only when no solution can be found will foreclosure proceedings be set in motion.

During a foreclosure, generally, the lender takes ownership of the property and sells it at an auction. The proceeds are then used to pay the outstanding mortgage. The legal procedures related to foreclosures vary in different states, but the general pattern is similar. The lender will advise the property owner of its intention to foreclose before filing the request in court.

Ohio consumers: Beware of creditor harassment by fake companies

Ohio consumers with past-due debts may have to endure many associated hardships. Even in cases in which payment agreements have been reached with creditors, debt collectors may become nuisances. In many cases, creditor harassment is committed by non-licensed companies that have no right to call consumers, and the calls often involve nonexistent debts.

A consumer in another state recently reported that she was the victim of such harassment about debts she did not owe. Reportedly, a voice message was left informing her that legal action would be taken should she fail to call back that day to arrange payment of the outstanding debt. When she called back, she was refused any information about the company and the alleged outstanding debt; however, immediate payment was demanded.

Bankruptcy and new habits may provide financial stability

Ohio consumers who are fighting a battle against overwhelming credit card debt may find comfort in learning that remedies are available. Some believe that many people's financial problems are caused by a few bad spending habits. Habits are hard to break, and recognizing the problem may be a good start. It may be necessary to go through personal bankruptcy before starting fresh with healthier money habits.

While automating payments is a good way to ensure that all payments are made on time, many consumers who use automation then stop reviewing their credit card statements. Special settlement offers or incorrect charges that are missed can have an adverse impact on a person's financial health. Paying only the minimum required amounts on credit cards is another bad habit that leaves a consumer stuck with debts for many years because only the interest is paid without reducing the principal amount.

PacSun chooses protection of Chapter 11 bankruptcy

Following the spate of clothing retailers to file for bankruptcy, PacSun -- a retailer of surfwear with about 600 stores nationwide, including in Ohio -- is the latest to follow that route. The retailer filed for Chapter 11 bankruptcy, announcing that it was a well-planned move to reorganize and restructure the company. Raised levels of competition and the increased popularity of online shopping were cited as part of the reason for the company's failure to show profits in recent years.

Filing for bankruptcy was in no way a negative move. With the protection of the U.S. Bankruptcy Code, the retailer was able to negotiate a deal with a private-equity firm to swap debt for equity that will provide the company with additional capital of about $20 million when it emerges from bankruptcy. To help fund the reorganization, Wells Fargo has also agreed to a $100 million loan.

Bankruptcy protection may be the answer for business debt

Small business owners in Ohio who are experiencing overwhelming debt may be surprised to learn the extent of the protection that can be obtained by filing for bankruptcy. Bankruptcy often provides a business owner with the opportunity to overcome excessive business debt. An attorney can explain the protections afforded under the federal Bankruptcy Code.

With careful planning and professional guidance, a business bankruptcy can provide a solution for nagging debt problems. Personal and business bankruptcy will protect a small business owner from creditor harassment. Depending on the type of bankruptcy filed, debts may be discharged, reduced or delayed, which may be just what is needed to get the business back on track.

Misinformation about a reverse mortgage can lead to foreclosure

Reverse mortgages were created by Congress in the 1980s to help older homeowners cope with living expenses by drawing income from their home equity. After home values crashed due to the Great Recession, many senior homeowners nationwide, including here in Ohio, faced foreclosure. Although reverse mortgages may be the perfect option for some, consumer advocates warn that this type of loan is a risky choice because it is a complicated product.

A 68-year-old widow in another state explained that she lost her house due to her lack of understanding about the details of a reverse mortgage. When they needed $20,000 for home repairs in 2008, her husband took out a reverse mortgage. Because she was two years away from qualifying for a reverse mortgage at that time, she had her name removed from the title to the property, leaving her 65-year-old husband as the sole owner. According to the woman, the loan servicer assured her on several occasions that she would not lose the house should anything happen to her husband.

Auto lender objects to discharge in bankruptcy -- unsuccessful

Ohio consumers who decide to file for personal bankruptcy do so for multiple different reasons. Some may have overwhelming credit card debt while others may have committed to loans or purchases that they cannot afford to pay back. An insurance salesman in another state started driving for Uber on a part-time basis in Oct. 2014. His intentions were to enhance his income, but he ultimately sought bankruptcy protection.

Although he had a functioning car that was fully paid, he followed Uber's advice to purchase an SUV that could carry more passengers and luggage on trips to the airport. The monthly instalment was $550, and he soon found that this was unaffordable. He filed for Chapter 7 bankruptcy within a month. The holder of the auto loan protested and argued that the debtor must be held accountable for the loan.

Consumer sues company for alleged unfair debt collection

Ohio consumers who are overwhelmed by debts may experience harassment by creditors or debt collection agencies. Although there are laws to protect consumers against unfair debt collection, the practice remains prevalent. Not all victims of such harassment know that they may take legal action against companies that unfairly hound them.

A federal lawsuit was recently filed against a company in another state. The lawsuit alleges the company violated the Fair Debt Collection Practices Act and the state's other consumer protection laws. According to court documents, the defendant contacted the plaintiff in March 2015 with regards to an alleged debt that was due for payment.

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