Minnillo & Jenkins, CO. LPA
Cincinnati 513-723-1600 [ Hyde Park, Eastgate, Fairfield, Mason ] dayton 937-550-1030 email Us for answers Email

Cincinnati Bankruptcy Law Blog

Small business bankruptcy lessons from a billionaire

Some people associate business bankruptcy with failure, but this is far from the truth. Donald Trump's net worth has been reported as somewhere between $4.1 billion and $8.7 billion which is hardly a sign of a failure. Yet, Trump, who has never filed for personal bankruptcy, has seen four of his business ventures file for business bankruptcy.

The Chapter 11 filings allowed the billionaire to engage in business debt negotiations that resulted in new, more favorable terms being worked out with creditors. Whatever concessions Trump was forced to make does not appear to have hurt his personal wealth, and the companies involved in each business bankruptcy underwent a business reorganization that allowed them to continue operating.

What is “parking the debt?”

Anyone who has ever watched television or dealt in-person with debt collectors in Cincinnati knows how sneaky they can be. Generally, there are certain rules set out by the Fair Debt Collection Practices Act that creditors must follow when calling about a debt. These dictate what they can and cannot say. But what if you never knew about the debt in the first place?

According to federal law, there are creditors, such as hospitals, who are not required to send a bill before sending collectors after you. All the sudden, you may be dealing with wage garnishment and other punishments for money you did not know you owed. This is called “parking the debt.”

Court rules in favor of banks on second mortgages.

Chapter 7 bankruptcy is widely thought to be a proceeding through which all of a person’s debts can be discharged. There are certain exceptions to this rule, however, which further emphasize the importance of having professional advice before deciding whether to file and, if so, which type of bankruptcy will be the best option. A recent United States Supreme Court case is a good example of the nuances of bankruptcy law.

For those familiar with bankruptcy law, it is probably not surprising to know that a mortgage that secures a home is generally not dischargeable in Chapter 7 bankruptcy. The word "secures" is the key here: Chapter 7 bankruptcy may cancel all unsecured debts, but secured debts, such as mortgages, generally survive the proceeding.

Supreme Court changes bankruptcy law

For many years, conventional wisdom and practice has stated that, during bankruptcy, certain debts would automatically be lessened or even eliminated. One of these was second mortgages. According to the U.S. Supreme Court, this is no longer the case.

In a recent ruling, the Supreme Court unanimously decided that bankruptcy would not automatically void second mortgages. This held true even if the home wasn’t worth even the first mortgage amount, called “being underwater.” This is not to say the second mortgage must remain, but it is now up to the lender to decide.

Ohio foreclosures rates continue to fall, but still high

A new report shows that foreclosure rates have fallen since 2011, but are still twice as high as the average rate in the 1990s. 2014 saw a drop of nearly 20 percent over 2013 with only about 44,000 homes foreclosed upon. But, with the average 20 years ago being about 21,000, there is still a long way to go in the recovery from the predatory lending period in the early 2000s.

The report did include tax foreclosures that were completed last year. But, it does not include the 3,000 new tax foreclosure cases that were filed last year. These types of foreclosures typically cover abandoned properties that are managed by county boards of revision. When these kinds of cases were first allowed in 2006, it was a benefit to various communities, as the government could grant the property back to the banks for reutilization more easily. But the number of tax foreclosures has not decreased quite as much as some figures show, as they are handles outside of the court.

How bankruptcy can help you with medical bills

Even with the best insurance, medical bills can become a crippling weight for many families. If you find you cannot handle your bills for your hospital or doctor visit, it may be time to consider bankruptcy. There are two main options that will handle your medical expenses differently, depending on your situation.

The first thing to know is that medical bills are considered “dischargeable debt.” This means that if the court grants your bankruptcy, you are no longer held personally liable for it. This is especially important if you are considering chapter 7 bankruptcy.

Bankruptcy options for businesses

It's no secret that small businesses often fail. No matter how great of an idea you had, if the community simply is not interested, it can become very difficult to keep the doors open. The end of a business does not have to be the end of you, however. There are options to get a fresh start. Businesses have four different bankruptcy options to settle their debts and move on.

The first is chapter 7. Similar to chapter 7 bankruptcy for individuals, this option allows a business to liquidate their assets to pay off their debts. The most common users of chapter 7 bankruptcy are those sole business owners who simply did not get off the ground and do not really have a successful future before them.

Chapter 7 vs. Chapter 13 Bankruptcy

When individuals have unexpected life changes, like sudden unemployment or medical expenses, debt can become a crushing weight. Unpaid bills pile up, and all the sudden you wonder how you are going to feed your family this week. No matter your situation, declaring bankruptcy can help you stand on your own two feet again. There are a couple main types of bankruptcy: Chapter 7 and Chapter 13.

Chapter 7 bankruptcy

Time-barred debts: how collectors violate the law

In an earlier post, we discussed how the Fair Debt Collection Practices Act protects you from creditor harassment. Essentially, the FDCPA prohibits debt collectors from engaging in harassing, deceptive, or unfair practices in order to collect from you. The FDCPA also prohibits debt collectors from trying to collect on time-barred debts.

According to Ohio law, debt collectors have eight years to sue you for any unpaid debt. This eight-year period is known as the statute of limitations. After the statute of limitations is up, any unpaid debts are considered to be "time-barred." Debt collectors cannot sue you for time-barred debts. If they try to, they could be violating the FDCPA. 

Can I save my business through bankruptcy?

Starting, building and running a business is a continuous act of courage. It takes courage to overcome self-doubt or the doubts of others about your idea. It takes courage to put your money on the line, or possibly even your property as collateral to secure start-up funding. It takes courage to keep going even if the profits do not start rolling in right away. It takes courage to keep from second-guessing the wisdom of your decision to become an entrepreneur.

Of course, if fortitude was all that it took to be successful in business, there would be many more business owners in Ohio right now than there are. Sometimes initial plans do not work out. Sometimes you can be a victim of bad timing, such as starting a business during unfavorable economic conditions in the state or even nationwide. There is always the risk of not succeeding right away; many of America’s greatest business tycoons, from Henry Ford to Donald Trump, have shared one thing in common: they have experienced business failures.

Contact Us

Office Visit Our Family Law Site