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.
If an individual -- or a couple -- does a financial analysis and finds that, by cutting back on unnecessary spending, it may be possible to make a monthly payment on debts, Chapter 13 may be the suitable option. This allows consumers to pay debts over three to five years according to a court-approved repayment plan. Although this is also a long-term solution, accrual of interest on unsecured debts will cease during the repayment period. In order to be approved for Chapter 13, a consumer will have to show his or her ability to maintain monthly financial obligations such as utilities, mortgage or rent, food, and other expenses while also paying a portion of outstanding debt.
Deciding to file for personal bankruptcy is not a decision to be made without being fully informed of the rules and consequences. The advice and guidance of an experienced Ohio bankruptcy attorney may be invaluable. A lawyer can assess the client's financial situation and suggest a suitable way forward that will suit the individual's unique circumstances. The prospect of going through personal bankruptcy may seem an overwhelming process but will likely provide the relief necessary to re-establish financial stability.
Source: nj1015.com, "Deciding on bankruptcy to solve your debt", Karin Price Mueller, Dec. 18, 2015