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Cincinnati Bankruptcy Law Blog

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.

How frequently can I declare bankruptcy?

For many people in Ohio, bankruptcy is something to be avoided at all costs, something they would never consider normally. Other Ohioans are risk-takers, often putting it all on the line over and over again in different ventures in hopes to make it big. Sometimes, these risks pay off; other times, they crash and burn. For the risk-takers, and for others as well, it is important to know just how often you can file for bankruptcy.

The answer to this question is dependent on your previous filings. If you successfully filed for chapter 7 bankruptcy in the past eight years, you cannot have your debts eliminated again until after that time period. Additionally, you must wait at least six years after filing for chapter 13 bankruptcy to get a chapter 7 discharge.

Ohio debtors to receive part of millions assessed against Chase

Owing debt you can’t pay is a bad enough feeling. But when you are being harassed to pay debt you’ve already paid off, debt that has been discharged in bankruptcy, or even debt you never owed at all, the feeling goes from bad to frustrated and even angry.

These feelings are now being compensated by one of the biggest names in credit cards.  Debtors, real and imagined, in Ohio and most other states, are entitled to part of the $136 million settlement agreement by Chase Bank as payment for its illegal collection practices. 

Is it time to file for bankruptcy?

When you are facing monumental financial challenges, bankruptcy often becomes the only option. Yet, individuals and families sometimes don’t understand the full process and implications of filing for bankruptcy before diving into it. An experienced bankruptcy attorney will be able to explain the entire process fully to you, but it is important to know when it is time to file.

The first thing you should do when you are feeling underwater with your unpaid bills and other debt is to try to negotiate with your creditors. Oftentimes, filing for bankruptcy, especially chapter 7, can leave your creditors unpaid, making it a lose-lose situation. Therefore, they will sometimes negotiate with you to make sure you can pay back the debt. If this doesn’t work, however, it may be time to file.

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.

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