The decision to file for bankruptcy can be daunting, but it may be the best option for some homeowners. If you’re thinking about filing for bankruptcy, it’s important to understand the process and your options.
This article will provide an overview of bankruptcy in Ohio and outline the steps you need to take if you decide to file. So, whether you’re considering bankruptcy or just want to know more about your options, keep reading.
What Is Bankruptcy?
Bankruptcy laws provide people with the opportunity to start over by liquidating assets and, in some cases, creating repayment plans for their creditors.
Bankruptcy laws are designed to accomplish the following:
- Give honest debtors a fresh start by relieving them of most of their debts.
- Pay debtors promptly if there is property to repay.
Signs that You May Need to File for Bankruptcy
When considering bankruptcy, it is important to know that it is not suitable for everyone.
Here are some signs that you may need to file for bankruptcy:
- You’re being threatened with foreclosure.
- You’re frequently being called by debt collectors.
- You’re using your credit cards to pay for rent and food.
- You’re unable to work a payment plan with your creditors.
- You’re unable to stay current with your mortgage payments.
Is Bankruptcy the Only Way Out?
When considering bankruptcy, make sure you weigh all your options. Two alternatives to bankruptcy are settling your debts or taking credit counseling. You can decide which option is best for you with the help of a financial advisor.
You can also reduce your monthly payments by consolidating your debt. As a result, you will save money on interest and repay your debt faster.
The option of negotiating directly with your creditor is also available. You will save yourself from bankruptcy if you are able to reach an agreement.
The Types of Bankruptcy
There are two main types of bankruptcies available for individuals in Ohio: Chapter 7 and Chapter 13.
Chapter 7
Chapter 7 bankruptcy is usually the first option considered because it is quick to complete and does not require repayment to creditors. Additionally, it’s a good option for people with minimal work and living needs, since unnecessary luxury items won’t be lost. The final thing to keep in mind is that you will not be able to catch up on mortgage payments or car payments when you file for Chapter 7 bankruptcy.
Chapter 13
Chapter 13 filers, in contrast, are given three to five years to repay their debts. There are many distinctions between Chapter 13 and Chapter 7. You can, for example, avoid foreclosure and car repossession while maintaining all your property. Moreover, you can negotiate a payment plan with your creditor if you cannot discharge your debt.
How to File for Bankruptcy in Ohio
There are some people who avoid bankruptcy because they are concerned about the cost of a lawyer. Bankruptcy attorneys are expensive and the most costly part of filing for bankruptcy in Ohio. Fortunately, you don’t need an attorney to file for bankruptcy.
Below are the steps to do so.
- Gather Your Ohio Bankruptcy Documents: You will need copies of your tax returns from the previous two years and your last 60-day pay stubs.
- Take a Credit Counseling Course: Learn more about the credit counseling course here.
- Fill Out the Bankruptcy Forms: You can download the forms free through USCOURTS.gov.
- Pay Your Filing Fee: Chapter 7 bankruptcy requires a court filing fee of $338. When your income does not exceed 150% of the poverty guidelines in Ohio, you can request a filing fee waiver.
- Print Your Bankruptcy Forms: Make sure to print all forms on regular, white 8.5″ x 11″ paper using black ink.
- File the Forms With the Ohio Bankruptcy Court: There are two bankruptcy districts in Ohio: the Northern District and the Southern District. As long as you show valid identification, you can file in person in both districts. Your bankruptcy paperwork may be able to be mailed to the court clerk, depending on your filing district. Before submitting your paperwork, check the court’s website or call the clerk to confirm delivery options due to COVID-19.
- Mail Documents to Your Trustee: You will be assigned a trustee after filing for bankruptcy.
- Take Another Course: Attend a debtor education course within 60 days of the 341 meeting.
- Attend Your 341 Meeting: Your creditors can attend this meeting to ask questions.
What Happens When You File for Bankruptcy in Ohio?
When you declare bankruptcy, most of your unsecured debts will be discharged. However, student loans, child support, and alimony are not dischargeable in bankruptcy. Additionally, some assets may have to be surrendered depending on your bankruptcy choice.
Will Bankruptcy Affect Your Credit Score?
You will have a bankruptcy record on your credit report for seven to ten years once you file for bankruptcy. The result may be that you will have a harder time getting a loan or credit line in the future.
Rebuilding Your Credit Post Bankruptcy
You don’t lose your financial future if you file for bankruptcy, contrary to popular belief.
The following measures can help you rebuild your credit:
- Taking out a small loan.
- Applying for a secured credit card.
- Maintaining a good payment history.
- Staying on top of your credit report for errors.
- Becoming an authorized user on a credit card.
Sell Your House for Cash & Avoid Bankruptcy in Ohio
There is no doubt that filing for bankruptcy can be intimidating, and it is natural to try to avoid it as much as possible. If you are feeling overwhelmed by your debts and concerned about your future, selling your home may be the best solution for you. By working with a trusted home buyer, you can avoid bankruptcy and regain your peace of mind. Contact us at Favor Home Solutions today to learn more about how we can help you sell your home quickly as-is, without agent fees, and hassle-free!
