Some Ohio consumers are overwhelmed with debts that may have resulted from unanticipated medical expenses or job losses that left them no option but to finance their daily living expenses through credit cards. While filing for bankruptcy may be the most appropriate route to go, it is a drastic step that needs careful consideration. Individuals may want to gain all the relevant information to enable them to make informed decisions that may determine financial stability in the future.
When filing for bankruptcy, the consumer will have to provide the court with details of every asset he or she has along with all outstanding debts. The court will then divide assets into those that are exempt and those that are non-exempt. The latter include assets such as second homes or vehicles and valuable collections that can be taken to cover debts. Equity on the family home, an automobile, and personal items are exempt and may not be seized.
A means test will determine for which chapter under the Bankruptcy Code the person qualifies. Chapter 7 and Chapter 13 are the most appropriate for individuals to file in their private capacities — not involving businesses. Chapter 7 — also known as the liquidation bankruptcy is typically suitable for those with few assets and no regular income. All high-value non-exempt assets will be sold at auction to cover debts. Unsecured debts like medical bills and credit cards may be discharged.
Chapter 13 bankruptcy allows consumers to maintain possession of their assets while reorganizing the payments of their debts over a period of three to five years. If the court-approved payment plan is followed, any outstanding balances at the end of the payment period may be discharged. However, utilizing the guidance and support of an experienced Ohio bankruptcy attorney may be helpful. A lawyer can explain the pros and cons of each chapter, and assist with the complicated administrative requirements of filing for bankruptcy.
Source: newswire.net, “Things You Need to Know About Bankruptcy“, Linda Graves, Oct. 8, 2016