A Comprehensive Guide to:
Chapter 7 Bankruptcy
By Board Certified Cincinnati Bankruptcy Lawyer, Credit Counselor, and Debt Counselor Richard West
If you are searching for a complete and comprehensive chapter 7 bankruptcy guide, one that explains everything you need or want to know in this topic, then you have found it. As a Cincinnati bankruptcy lawyer with over 3 decades of experience in this legal field I have the answers and the information that you are looking for.
I will give it to you in clear and easy to understand terms instead of the legalese or misdirection that many bankruptcy lawyers use. I will not use double talk or try to sound smart by using legal speak, I will be straight with you. As a bankruptcy attorney in Cincinnati I have filed thousands of chapter 7 bankruptcy cases but this is not the only thing that I do.
In addition to being a Cincinnati bankruptcy lawyer I am also a certified credit counselor, something few other bankruptcy attorneys are. This has allowed me to help many chapter 7 bankruptcy clients rebuild their credit within a reasonable time once their bankruptcy case has been discharged, and to help clients improve their credit reports by eliminating outdated or incorrect entries and other errors.
For many people a full financial recovery starts with a chapter 7 bankruptcy, but that is only the first step. AFTER your bankruptcy case is finished you need to rebuild your credit in order to get the fresh financial start that you deserve and the full financial recovery that you want, bankruptcy by itself will not do this.
If you are seeking answers and information about chapter 7 bankruptcy in Cincinnati, or another city in Ohio, then you will find this comprehensive bankruptcy guide extremely helpful. I have provided practical advice in plain English so that you can understand every step, and get the answers and debt solutions that you are looking for. I will also give you helpful information and legal advice that many bankruptcy lawyers in Cincinnati don’t disclose to their clients.
I have created this comprehensive chapter 7 bankruptcy guide to help consumers just like you understand how this type of bankruptcy works, what it can do and what it can’t, and whether this bankruptcy chapter is the right solution for your debts and your unique situation so that you finally get the complete financial recovery and fresh start that you need.
Is chapter 7 bankruptcy right for you, your finances, and your debt situation?
To evaluate whether a chapter 7 bankruptcy is the right choice in your situation you need to look at the big picture and examine your debts and finances closely. Right now we won’t get into the means test for chapter 7 bankruptcy, exemptions, median income charts, and the other technical aspects, laws, and requirements for this type of bankruptcy case. We will go into these highly technical factors later on in this guide.
At this point the only thing you need to answer is one crucial question, and this answer will help you evaluate whether a chapter 7 bankruptcy case would be the best solution for your situation and finances. Based on your current level of debt and your income can you take care of the basic necessities each month to provide for yourself and your family, and do you have enough income left over so that you can pay off your debts within a reasonable amount of time?
Your basic necessities cover expenses such as housing, transportation, food, health insurance, and other expenses that are necessary. What is considered a reasonable amount of time when it comes to paying off your debts? A reasonable time frame to repay all your debts is typically somewhere between 3 and 5 years.
If the honest answer to the question posed above is yes then an experienced bankruptcy lawyer in Cincinnati should explain that a chapter 7 bankruptcy is probably not the best possible solution to your debt and financial problems. In this situation your debts could be resolved within a reasonable amount of time by setting an appropriate budget and the implementation of some spending restrictions. If the honest answer to the question above is no then you may seriously want to consider bankruptcy, whether you choose a chapter 7 bankruptcy or another type instead.
What does a typical filer for chapter 7 bankruptcy look like?
When it comes to chapter 7 bankruptcy there is no such thing as a typical filer. With more than 30 years of experience as a bankruptcy lawyer in Cincinnati, Ohio I have seen people from almost all income levels, a wide range of professions, and varying debt amounts qualify for chapter 7 bankruptcy protection.
Some of my clients have had an income of over $100,000 a year, other clients only made a small fraction of this on a yearly basis. One of my clients brought in over $100,000 per year but she also had very high expenses each month for alimony, child support, housing, and transportation. Once the required monthly payments were made this woman had little left to live off, with nothing available to pay her medical bills or the credit card debt that she had. A devastating divorce wreaked havoc on this woman’s finances and credit. The bankruptcy court granted a discharge in this case without even asking any questions, the high income level was offset by the high monthly expenses.
Almost anyone can fit the profile of a typical chapter 7 bankruptcy filer. People who are married and those who are single, parents and individuals without children, home owners, vehicle owners, renters, and those with car loans could all be a typical filer for this type of debt relief. Having a higher level of income each month will not prevent you from using this bankruptcy code chapter if you also have high monthly expenses that are necessary. Even higher income levels can be decimated by home and car payments which are more costly, higher credit card debt, medical expenses paid out of pocket, and other necessary expenses like child support and alimony.
It is close to impossible to generalize what a typical filer for chapter 7 bankruptcy protection looks like because each situation is unique and there are a wide variety of scenarios which could be eligible for relief under this type of case. As a bankruptcy attorney in Cincinnati it has been my experience that more people could benefit from a chapter 7 bankruptcy, but most people do not realize this fact.
No one is above financial difficulties. As a Cincinnati bankruptcy lawyer I have had clients who filed for bankruptcy who were lawyers, doctors, sitting judges, bank presidents, blue collar workers, and even people who were unemployed. I have handled chapter 7 bankruptcy cases for people from almost all professions, and from almost all income levels.
Is chapter 7 bankruptcy a better option than chapter 13 bankruptcy?
One of the most common beliefs is that a chapter 7 bankruptcy is always better than a chapter 13 bankruptcy, but this is not true. As a bankruptcy attorney in Cincinnati I have had clients who seemed disappointed when I explained that a chapter 13 filing may be a better choice in their situation than filing for chapter 7 bankruptcy. Many falsely believe that a chapter 7 filing is more beneficial but this is simply not true.
I have had individuals ask me if it is better to file for chapter 7 bankruptcy rather than filing for chapter 13. These people do not understand that neither bankruptcy chapter is good, bad, better, or worse. Instead the important question needs answering is which one of these chapters will be best for your needs, debts, and finances.
In some situations choosing chapter 7 bankruptcy can be the best option, but sometimes it is not possible to file under chapter 7. If you have filed for bankruptcy in the previous 8 years then you will not be allowed to file for chapter 7 bankruptcy protection, even if all of the other requirements are met for this chapter.
Another example where a chapter 7 bankruptcy may not be the best option is if you own property whose value exceeds the current exemption amount that the bankruptcy laws allow. Say you own a vehicle outright, and the value for this vehicle is well in excess of $5,000. The exemption amount you are allowed under chapter 7 of the bankruptcy code would not provide protection for the full vehicle value. An experienced bankruptcy lawyer in Cincinnati should advise that a chapter 13 bankruptcy filing may be the better option in this situation. In addition there are certain financial transactions that could make a chapter 7 case impractical at a certain point in time.
In my experience as a Cincinnati bankruptcy attorney there are many situations where someone may qualify for chapter 7 bankruptcy but would actually get a better outcome if they used chapter 13 instead. Often a bankruptcy lawyer will choose to file chapter 7 rather than chapter 13 because the attorney does not feel confident in their ability to handle the added complexity and the extra complications that come with a chapter 13 bankruptcy case or the lawyer. So instead the client is advised to file chapter 7 bankruptcy in spite of the fact that this will not provide the best possible outcome in their specific situation.
Filing a chapter 13 bankruptcy case means the Cincinnati bankruptcy lawyer must make a commitment and stay involved in the case for between 3 to 5 years, until the case is finished. Many legal professionals do not have the time or the resources available to make this commitment to a client, and others do not want to commit for this extended period of time.
When talking with other bankruptcy attorneys some of these professionals have been frank in their conversations and confided that it is all about how much money they can make rather than focusing on a full financial recovery and the best outcome for their clients. This is something that they would never admit to a client though.
Some bankruptcy lawyers in Cincinnati would prefer to file for a chapter 7 bankruptcy and make some quick cash instead of building the long term relationship which is necessary for a chapter 13 bankruptcy filing. I think that this is dishonest and it is not ethical, and I feel the exact opposite. I help my clients determine which bankruptcy type is best for their specific situation so that a full financial recovery and a fresh start can be achieved, This is the purpose of filing for bankruptcy in the first place.
If we determine that a chapter 7 bankruptcy is not as beneficial as a chapter 13 bankruptcy for your needs and circumstances then we will become partners for the next 3-5 years or even longer if needed, so that you get the fresh start that you deserve and you can start rebuilding your credit once your bankruptcy case has been discharged.
Can you qualify for a chapter 7 bankruptcy?
When potential clients come to see me many have already done some research on bankruptcy lawyers in Cincinnati and chapter 7 bankruptcy using the internet. Usually these clients are just as confused after their research as they were before they started searching the web, sometimes even more so. The internet is full of misleading, deceptive, and confusing information about this topic and it can be very hard for a lay person to understand it all and separate fact from fiction.
When doing research the first thing that most potential clients notice is the means test. I have created a number of videos which explain the means test and how this test works, providing all the information and details that you need to know. These videos are available on my website and on YouTube, and they also explain what will happen if you can not pass the means test and why this may not even be important for chapter 7 bankruptcy. A qualified bankruptcy lawyer in Cincinnati who is knowledgeable in the bankruptcy laws and codes can usually resolve your debt problems and ensure you pass the means test if this is necessary.
If you have any equity in property that is considered excessive and you want to keep the property then it may be more difficult to qualify for a chapter 7 bankruptcy though. A chapter 7 case will typically discharge your debts and allow you to keep property but this is limited to the specific exemption amounts that the law allows. In Ohio the current bankruptcy exemption law allows the individual to keep one vehicle that is owned outright if the vehicle value is not above $3,675. An experienced Cincinnati bankruptcy attorney may be able to use certain other exemptions allowed by law to increase the equity amount that you are allowed, but if the vehicle value is much higher than the exemptions allowed than filing for chapter 7 bankruptcy may not be the best option available.
Usually a chapter 7 bankruptcy case will allow you to keep a single vehicle as long as it is not valued above $5,000 and the vehicle is paid off. If you have a vehicle with a value that is significantly higher than this amount then you could be ordered to pay something in order to retain the vehicle. Using a chapter 13 bankruptcy instead of chapter 7 bankruptcy may be a better option.
Never, under any circumstances, attempt to sign the title to your vehicle over to someone else so that you can file for chapter 7 bankruptcy and keep the vehicle that you own, this is illegal. If you do this then you may need more than just a Cincinnati bankruptcy attorney because you could face criminal charges.
What you need to know about the means test with chapter 7 bankruptcy.
The means test is related to your income. To be more specific this test examines your household income, all of the income that your entire household has available. A chapter 7 bankruptcy filing requires that all household income is listed so that it can be considered by the court. If your household income is enough for you to cover all of the necessary essentials and living expenses for the household plus pay something towards the debts that you owe within a reasonable length of time then you may not qualify for a chapter 7 bankruptcy case.
Even if you pass the means test this does not guarantee that you will meet all of the requirements that a chapter 7 bankruptcy case involves. Experienced bankruptcy lawyers in Cincinnati understand that the means test is just one of many tests which must be met before the bankruptcy court will consider a case and allow a chapter 7 filing to move forward.
Sometimes the means test may not even be needed to file for chapter 7 bankruptcy, depending on the situation, but this type of case is still not a slam dunk or guaranteed winner. If the bankruptcy court determines that you have sufficient income to meet your necessary expenses and pay some on your debts then this finding will normally prevent you from being approved for a chapter 7 filing.
A lot of bankruptcy lawyers in Cincinnati, and in other cities across the country, feel that the means test was poorly designed and that this test simply causes complication sand confusion. A number of situations could cause you to fail the means test, but due to special circumstances the court may consider you could still be allowed to file a chapter 7 bankruptcy filing instead of a chapter 13 bankruptcy.
In this situation the bankruptcy court could determine that the special circumstances would prevent you from paying on your debts. The court may allow a chapter 7 bankruptcy discharge even if you failed the means test or you have an income that is above the median income that is allowed.
Things you should never do before you file for chapter 7 bankruptcy!
If you are even thinking about filing for a chapter 7 bankruptcy there are some things that you should avoid at all costs in the months before you file for this protection. These include:
- Avoid making any large financial transactions, or any financial transactions that could significantly impact your finances, until after your speak with an experienced bankruptcy lawyer in Cincinnati.
- Do Not liquidate any retirement plans that you have.
- Never transfer property that belongs to you to anyone else. This can be considered fraud and viewed as an effort to hide assets by the bankruptcy court.
- Make your usual debt payments each month but don’t pay anything extra on these accounts.
- Avoid purchasing any property until you have consulted with a Cincinnati bankruptcy attorney. In some cases you may be advised to make a purchase before you file for chapter 7 bankruptcy but make sure you have sound legal advice before taking this step.
At times I have advised clients to buy a vehicle before their bankruptcy case is filed because it was easier for them to get credit before the filing, and they needed a reliable vehicle. With more than 30 years as a bankruptcy lawyer in Cincinnati I even know where to send my clients before they file for chapter 7 bankruptcy to make the process easier on them. You will find a much more extensive list of things that you should avoid before filing for bankruptcy on my website.
What debt types can be discharged with a chapter 7 bankruptcy case?
A variety of debt types can be considered for discharge with a chapter 7 bankruptcy case. These debt types include:
- Medical debts
- Personal loans
- Credit card debts
- Collateral loans
- Title loans
- Payday loans
You will find a video explaining how medical bills can be discharged by a chapter 7 bankruptcy here. This type of debt is one of the top reasons that consumers file for bankruptcy protection. Clients often want to know if they can still get needed medical care if they use bankruptcy to discharge medical debts, and the answer is normally yes. Discharging medical debts usually will not prevent you from seeing a physician or getting needed treatment for a medical issue at a hospital or an emergency room.
Laboratories and hospital bills are routinely discharged during a chapter 7 bankruptcy as long as the bankruptcy lawyer in Cincinnati knows about these debts and lists them in the filing. Out of thousands of clients that I have represented none have been unable to get treatment from these organizations just because they had a previous debt discharged, even when the same organization was used after the discharge. You will also not be refused treatment at emergency rooms. In fact ER staff can not normally tell whether you have filed for bankruptcy protection in the past.
If you owe debts to a private doctor and these debts are discharged in a chapter 7 bankruptcy then this could impact whether the physician will see you in the future. This will depend on your specific situation. You may find it is more difficult or even impossible to see the private physician if you owed them money and the debt was discharged during your bankruptcy case. As a Cincinnati bankruptcy lawyer I advise my clients to talk with their doctor about the debt before filing for bankruptcy, because you may be able to make a payment arrangement on the debt so that you can continue to see the physician after the bankruptcy filing.
You must understand that a doctor does not have to let you continue as their patient, but in my experience most physicians will keep you as a patient as long as you explain the situation and agree to pay the debt. Debts that you owe to any physician must be included in the petition for chapter 7 bankruptcy, you can not exclude any debt that you owe from this petition. If the physician debt is discharged in your bankruptcy case then the doctor can not try to collect, but you can always continue to pay on these debts if you choose to. A lot of my clients choose this method so that they do not have to find a new physician.
Credit card and personal loan debts
The most common type of debt that is discharged through chapter 7 bankruptcy is credit card debt. Personal loan and signature loan debts, just like credit card debts, are unsecured debts and are usually discharged successfully during bankruptcy as well. Once a petition for chapter 7 bankruptcy is filed expect these accounts to be closed by the issuer but once your bankruptcy discharge is ordered most people can get credit cards without any problems.
This type of loan generally come from finance companies such as Household Finance, American General, Springleaf, One Main Financial, and Beneficial. Collateral loans typically charge a high interest rate, and the loan application requires you to complete a form that lists personal property that is used as security for the loan debt.
As an experienced bankruptcy lawyer in Cincinnati I have had clients tell me that their collateral loan application had property listed by financial company staff which the client did not even own. While a collateral loan is secured by the property listed in the application and the company can in theory take possession of the listed property the reality is usually much different. I have had many clients who attempted to turn the listed property over to the finance company in order to discharge the remaining debt, and these clients found that the company refused to accept the property return.
Ohio is a state which allows title loans, and these loans are legal under state law. What does this mean if you plan on filing for chapter 7 bankruptcy though? Title loans typically carry an exorbitant interest rate, leaving the borrower with the choice of paying for necessary expenses or making loan payments so that the vehicle is not repossessed. Companies that offer title loans will normally take possession of the vehicle if the loan payments are not made on time, and I find this type of debt the most frustrating and dangerous.
If you lose your vehicle then it may be impossible to go about your daily life, creating a big hardship that just compounds your financial problems. Title loan debt can be discharged if you file for chapter 7 bankruptcy, but the security interest that the company has in your vehicle is not eliminated with bankruptcy discharge. If the required payments are not made then your vehicle could be repossessed by the company in spite of the discharge. In this situation bankruptcy will not protect your vehicle.
As a Cincinnati bankruptcy attorney I advise clients with title loans who have financial problems to make these loan payments, and to stop paying other debt types which are unsecured and will be discharged in bankruptcy. I also tell my clients that they should pay off any title loan before they file for bankruptcy if this is at all possible so the client keeps their vehicle. This means you could skip monthly payments on credit card debt in order to pay the title loan, and it is normally a safe move because most credit card companies will not sue you right away. This will help you keep the vehicle that you rely on after filing for chapter 7 bankruptcy.
Payday loans can be discharged by filing for chapter 7 bankruptcy. This type of loan involves a significant amount of paperwork that must be signed, and some of these documents are worded to give the impression that the loan can not be discharged in bankruptcy but this is not usually true.
Under the bankruptcy laws the discharge of any loans and advances made within 70 days of filing for bankruptcy may be limited to $825 maximum, but this is not always the reality. My experience as a Cincinnati bankruptcy lawyer, in cases which involved this type of loan, is that payday loan creditors do not usually request payment for this debt type even when the debt amount was above the maximum amount that the law allows.
Payday lenders usually require loan repayment through automatic deduction from your bank account. These lenders take the loan payment directly from your bank account, the same account where you have your paycheck direct deposited. The deduction is timed so that the lender gets their money as soon as your pay hits your account. Withdrawing your pay before the deduction is made is almost impossible.
Some payday lenders accept a post dated check for loan repayment, and as soon as the date on the check arrives the lender cashes the check for their payment. Stopping payment on the post dated check can be close to impossible because these creditors are very good at getting paid regardless of a stop payment efforts that you have made and they have plenty of experience in collecting the money. Once you file for chapter 7 bankruptcy protection this will stop these loan payments and automatic deductions.
Could filing for chapter 7 bankruptcy cause me to lose my vehicle?
This is one of the most common questions that I get as a bankruptcy lawyer in Cincinnati. If you don’t have a vehicle then getting back and forth to work, shopping for groceries, paying your bills, and even running errands or other daily chores can become impossible. I have had clients express that they never considered bankruptcy in the past because they were so fearful of losing the only vehicle that they had. These are individuals who did not know whether the loss of their vehicle was going to happen if they filed for bankruptcy, but the thought was so frightening that they did not even investigate this financial solution to their money woes.
Bankruptcy never has to cost you your vehicle!
If you have a vehicle that is valued higher than the exemptions that a chapter 7 bankruptcy allows then you may need to use a chapter 13 bankruptcy instead in order to keep your vehicle, but debt discharge is still possible under this chapter of the bankruptcy code as well. In some cases the creditor would receive little money even when you use chapter 13.
As a bankruptcy lawyer in Cincinnati I handle several cases every month that involve clients who fully own at least one vehicle that is completely paid for, and who sometimes have two or more vehicles, filing for chapter 7 bankruptcy on behalf of these clients. My clients do not normally lose their vehicles as a result of their bankruptcy.
In chapter 7 bankruptcy vehicles may fall into one of two categories. One category covers vehicles which are fully paid for and the other covers vehicles that have a debt attached to them. The first category places the equity amount in the vehicle at the current value of the vehicle because there is no debt attached to this property. As I explained earlier chapter 7 bankruptcy provides protection in an amount of around $5,000 when all allowable exemptions are combined and applied to the vehicle.
The starting point for determining the value for your bankruptcy case will be the blue book value, but remember that this is just a starting point and not necessarily the value applied by the bankruptcy court. The vehicle that you have could be valued differently from the stated Kelly Blue Book value listed, and the deviation could be higher or lower. My experience as a bankruptcy lawyer in Cincinnati is that if your vehicle has a clean trade KBB value which is under $5,000 then it is usually possible to keep your vehicle with a chapter 7 bankruptcy filing.
The second vehicle category comes into play if your vehicle is not paid off completely, and you still owe a debt on it. In this situation any debt still owed on the vehicle will be deducted from the value of the vehicle in order to determine the equity amount that you have. As long as your vehicle debt payments are current and your equity amount is calculated at under $5,000 filing for chapter 7 bankruptcy should not cost you the vehicle.
If you have a vehicle value which is considerably more than the combined exemption amounts that I can use to protect the vehicle with a chapter 7 bankruptcy case then we may want to consider using a chapter 13 bankruptcy filing instead so that your vehicle is protected and you don’t lose it.
Under a chapter 13 case the bankruptcy exemption applied can protect your vehicle. This exemption works as follows:
Each individual is allowed one vehicle exemption when a bankruptcy petition is filed, and this exemption protects the interest that the filer has in the vehicle up to the exemption amount. When a married couple files for joint bankruptcy protection are allowed an exemption for each spouse as long as the title is a joint title. A chapter 7 bankruptcy case would typically protect a $10,000 vehicle that is jointly owned by both spouses. This is because each spouse is the owner of half of the vehicle, and each spouse is entitled to an exemption of up to $5,000 when all allowed exemptions are combined. This would fully protect a vehicle with a value of up to $10,000 which is jointly owned in most cases.
What if the spouses jointly own a $10,000 but there is another vehicle owned by one of the spouses that has a value of $3,800 though? In this scenario the vehicle with the lower value, $3,800, could either be given to the bankruptcy trustee or the couple could choose to make an agreement with the trustee to pay the vehicle value over a specified time period which usually averages 6 months. When this happens the couple could keep both of their vehicles in a chapter 7 bankruptcy.
If neither of the scenarios listed above is possible then a chapter 13 bankruptcy may be a better choice so that you can keep the vehicles and still discharge some of your debts. As a Cincinnati bankruptcy attorney I would advise this method. You would be required to pay some money to certain creditors but the trade off is that you would not lose your vehicles. A chapter 13 filing could provide other benefits that we can evaluate as well.
Automobile redemption: What it is and how it works!
If the debt on your vehicle is more than what the vehicle is actually worth then using the redemption process could help you pay a lower amount than the full debt amount owed AND you could still keep your vehicle. For example suppose that you have a 2014 vehicle valued at $10,000. During the purchase you were overcharged for the purchase price and shortchanged on your trade in amount. Because of these factors you currently owe $20,000 but the vehicle is only valued at $10,000.
As an experienced bankruptcy lawyer in Cincinnati I have learned about special finance companies that will offer loans for the sole purpose of vehicle redemption for individuals who have filed for chapter 7 bankruptcy protection. 722 Finance is one of these special finance companies. In the example above these special finance businesses would provide a $10,000 loan, and the loan proceeds would be used by you to pay the creditor who holds the vehicle loan. This creditor gets the vehicle value, the $10,000, and the bankruptcy court will then discharge the debt balance of $10,000 above the current value of the vehicle at the end of the bankruptcy case.
In this example you will have a new vehicle loan to the special finance company, and you will owe the $10,000 value of the vehicle to this business. The new loan can include a high rate of interest, at times s high as 24%, but you will no longer owe far more than your vehicle is actually worth and you get to keep the vehicle.
What is debt reaffirmation?
If you owe a debt for a vehicle then when I file a chapter 7 bankruptcy petition as your Cincinnati bankruptcy attorney you may be asked by the creditor to provide something called debt reaffirmation. The debt reaffirmation process during chapter 7 bankruptcy is a simple one. You will be required to resign certain documents and this affirms that you want to keep the vehicle loan and will continue to make the vehicle loan payments as agreed.
The loan terms and payment amount involved normally do not change, so it is as if this specific creditor is not involved in the bankruptcy. In my experience as a bankruptcy lawyer in Cincinnati I have found that debt reaffirmation is extremely common in chapter 7 bankruptcy cases where clients want to keep the vehicle.
Vehicle purchases before and after filing for bankruptcy.
Sometimes you know that you are not interested in keeping your current vehicle even before you file for bankruptcy protection, a number of my clients as a bankruptcy attorney in Cincinnati know this fact even before our initial consultation. Neither debt reaffirmation or redemption are something that you want. You are ready to return the vehicle to the creditor and be done, washing your hands of the problem once and for all. Your vehicle may be in bad condition, you could owe much more than the vehicle is currently worth, it could have high mileage, or there could be other issues that make keeping the vehicle a bad idea.
A vehicle is a necessity though, and if you plan on giving back your current vehicle then you will need to think about whether you should try to purchase a new one before you file for chapter 7 bankruptcy protection or wait until after the bankruptcy petition is filed. No two circumstances and situations are the same. As a Cincinnati bankruptcy attorney I have learned that a client is typically better off buying a new vehicle before their chapter 7 bankruptcy petition is filed.
For most people getting financing for a vehicle will be easier before they start a chapter 7 bankruptcy case, even if the individual has poor credit. After a chapter 7 bankruptcy case is filed some creditors will not consider you for any type of loan for months or even a year or more after your bankruptcy case is discharged. When I represent clients as a bankruptcy attorney in Cincinnati I usually advise them to make the vehicle purchase before the chapter 7 bankruptcy case is filed.
This scenario involves purchasing the new vehicle before your chapter 7 bankruptcy case is filed, then reaffirming this new vehicle debt during your bankruptcy and surrendering the previous vehicle that you do not want to keep to the original creditor during the bankruptcy proceedings. The vehicle that you surrender is usually auctioned off by the creditor who gets it back in order to try and recoup some of the debt owed, but any unpaid balance can not be recovered from you because the full debt amount is normally discharged during your bankruptcy and you are off the hook for any unpaid balance.
If I file for chapter 7 bankruptcy what will happen to the lease on my apartment?
Usually your apartment lease will not be impacted at all when you file for chapter 7 bankruptcy protection as long as the lease payments continue to be made. The apartment complex may ask that you reaffirm your current lease but even this may not be necessary. As a bankruptcy lawyer in Cincinnati most of my clients do not have a problem, and many do not even have to reaffirm their lease. The lease generally continues as normal as long as you pay the lease payments each month.
Your apartment lease must be listed in the chapter 7 bankruptcy petition filed with the court, this is a debt and you must list all of the debts you owe in the petition. We will detail in your chapter 7 bankruptcy petition that you will keep the current lease and will make the lease payments when they are due. Filing for bankruptcy protection will not typically cause you to be evicted as long as you make the required payments on time, but if you do not make one or more payments when they are due then you can be evicted just like someone could who has not filed for chapter 7 bankruptcy.
In some situations you may find that the best option is to break the current lease that you have on your apartment and find another residence. When financial problems start, whether this is due to job loss, medical problems, divorce, or the death of your spouse, you could discover that the current apartment you are leasing is more than you can afford and chapter 7 bankruptcy can be the solution.
Bankruptcy can allow you to break the current lease that you have, find lodgings that are more affordable, and then discharge any remaining lease payments owed through your chapter 7 bankruptcy case. Even damage claims made by the landlord against you can be discharged.
In these circumstances it is best to move before I file a chapter 7 bankruptcy petition as your Cincinnati bankruptcy lawyer. Once you have moved out of the apartment any debt associated with your current lease can be discharged during your bankruptcy. My experience in over 30 years and thousands of cases has shown that few clients have had a difficult time finding a residence after filing for chapter 7 bankruptcy, and sometimes the opposite is true, although many clients have expressed concern when they have consulted with me before filing for bankruptcy.
Filing for bankruptcy protection may even make you a better potential tenant for many landlords because your debts have been eliminated. This means the landlord does not need to be concerned about creditors who may try to garnish your income or take money from your bank accounts, so you should have the money to meet your lease obligations on time each month.
Chapter 7 bankruptcy and home ownership.
Many of the clients that I represent as a bankruptcy lawyer in Cincinnati either own or are purchasing their homes, and this often means a mortgage. Chapter 7 bankruptcy does not mean that these clients lose their home.
The personal residence equity exemption in Ohio is $132,000 for each individual. A married couple with joint ownership of the residence could protect up to $264,000 in equity and usually still qualify to file for chapter 7 bankruptcy. I have clients who are older married couples, and they have sacrificed and scrimped to pay off the mortgage debt on their home. These clients truly need chapter 7 bankruptcy protection but they are unwilling to give up the real estate that is the only home they have. A decade ago this may be a big concern because the residential real estate exemption in Ohio at the time was just $5,000 per individual. That is no longer in place thd this exemption has changed considerably.
Real estate values have dropped sharply in recent years though and today many homeowners find that they actually have very little equity left in their home, if they have any at all. When these clients ask my advice as a bankruptcy lawyer in Cincinnati I tell them to think about letting their property go in their chapter 7 bankruptcy case. At the very least these clients should refuse to reaffirm the mortgage debt so that they can always walk away and not look back in the future if needed.
Unlike vehicle loans which are commonly reaffirmed during a chapter 7 bankruptcy in my experience as a Cincinnati bankruptcy attorney few people reaffirm mortgage debt during these proceedings. In the mortgage industry it is not a common practice for lenders to even request debt reaffirmation. However as long as you continue to make monthly mortgage payments when they are do then you will normally not lose your home because you did not reaffirm this debt during chapter 7 bankruptcy. Life will go on almost like you never filed for chapter 7 bankruptcy in the first place.
Almost but not completely though.
As a Cincinnati bankruptcy attorney I will explain the almost to every client. When you filr for chapter 7 bankruptcy protection and you do not reaffirm mortgage debt then the debt will be discharged at the end of your successful bankruptcy case. The property still has a mortgage lien attached though and in order to own the home outright without a lien the mortgage debt must be pain in full for you to gain clean title to the property. You are no longer under a legal obligation to pay the mortgage debt but stopping payments means that the home will be foreclosed on and the lender will move to take possession of it.
Pay and stay is a process that allows you to keep making your monthly mortgage payments even after filing for chapter 7 bankruptcy. As long as you make payments until the mortgage debt is paid in full then the lender will release the mortgage lien and you will gain a clear title to the property. Another option I advise clients to use as a bankruptcy lawyer in Cincinnati is to sell the property off, take the money that is made to pay off the full amount of the mortgage lien, and give the buyer a clean title. Any profit that is made with the sale of your home is yours and you keep it.
What does pay and stay do to your credit?
If you fail to reaffirm your mortgage debt during chapter 7 bankruptcy and you use pay and stay then any mortgage payments you make from that point on will not be listed on your credit reports or reported to the major credit bureaus by your lender. The lender takes a position that you discharged the mortgage debt during your chapter 7 bankruptcy so this debt is no longer owed, and they have no reason to report these payments to the credit bureaus.
The downside here is that you are making payments but your credit reports do not reflect these payments. There are some benefits that a Cincinnati bankruptcy lawyer can explain as well though. The mortgage debt is no longer reported to the credit bureaus because the debt was discharged and yo no longer owe it. As a result you could see the debt to income ratio that you have drastically improve.
As an experienced bankruptcy attorney in Cincinnati I have found that failing to reaffirm mortgage debt during chapter 7 bankruptcy can have far more positive aspects than negative ones. You could decide to walk away and wash your hands of the home, even in the future. If foreclosure efforts are started by the lender and the property is taken back you still owe nothing because your debt was discharged during your chapter 7 bankruptcy case.
What about land contracts during chapter 7 bankruptcy?
What happens during chapter 7 bankruptcy if you are buying or selling a property on a land contract instead of using a traditional mortgage though? If you are the buyer listed in the land contract then a real estate interest in the property has been established, and this means that the residential real estate exemption allowed during chapter 7 bankruptcy would be applied by a qualified Cincinnati bankruptcy lawyer.
If you are the seller listed in the land contract then the bankruptcy law does not allow you to use a residential real estate exemption, and yoru equity in the property may not be protected if you file for a chapter 7 bankruptcy. As a land contract seller you are entitled to the contract payments, and you could lose this income if you choose a chapter 7 bankruptcy case. As a highly experienced bankruptcy lawyer in Cincinnati I would advise a client in this situation to look at this factor and consider filing for chapter 13 bankruptcy instead in many cases.
Rental real estate does not receive any residence exemption during chapter 7 bankruptcy! Equity that you have in any business or rental real estate can not normally be protected in a chapter 7 bankruptcy case, and a better choice is usually to use a chapter 113 case instead.
Credit union debts pose a special situation!
With chapter 7 bankruptcy credit unions pose a special situation, and any Cincinnati bankruptcy attorney should warn clients about these facts when they owe debts to a credit union. Credit unions are usually easier to work with and often approve loans when other creditors turn you down. Some clients have a mortgage loan, vehicle loan, credit cards, personal loan, savings account, and checking account all with the same credit union. A lot of people only use a credit union and shun banks because they tend to be more difficult to deal with.
Credit union debt can complicate a chapter 7 bankruptcy and make things more difficult though, because of something called cross collateralization. This is a legal concept that describes a practice that credit unions use, and it links all of the collateral and the debts of the member together.
For example you have a personal loan, a credit card, and a vehicle loan from your credit union. All of these loans would be secured by the vehicle, because this is the security or collateral used for the vehicle loan that the credit union provided. The credit card and personal loan debt is also secured by this collateral.
When clients consult me as a bankruptcy lawyer in Cincinnati and they have this type of credit union debt I explain that a missed payment on any of these debts could mean the vehicle may be repossessed even if the vehicle loan is paid. A missed credit card payment could result in the loss of your vehicle and an empty account. Clients who are not warned of this by their Cincinnati bankruptcy attorney may end up confused, angry, and frustrated because they were not aware of cross collateralization and they were caught off guard when the vehicle was taken back by the credit union.
Normally this is the point where the credit union informs you that all of the institution debt is secured by using the vehicle as collateral. The credit union has a legal right to take back the vehicle because you missed a credit card or personal loan payment, or even empty out your accounts at the institution for any missed payments, but they do not tell you this until it happens in many cases. By then it is usually too late. Usually all of these steps are taken at the same time. This typically means late fees, bounced checks, charges for insufficient funds, and even more debt. This is not the best way to learn the concept of cross collateralization.
During a chapter 7 bankruptcy case cross collateralization can wreak havoc. Many clients want to reaffirm vehicle loan debt during their bankruptcy to keep their vehicle, but discharge any credit card debt or personal loan balances because these debts are unsecured debts. This arrangement is typically not acceptable to credit unions, and you must pay off all the debt balances including auto, personal, and credit card debt to the institution if you want to keep the vehicle. This could mean that the total accumulated debt that you owe totals far more than the current value of the vehicle.
As a bankruptcy lawyer in Cincinnati I can not force a creditor that is a credit union to allow you to reaffirm auto loan debt during bankruptcy while allowing the other debts to be discharged. In these cases the vehicle is normally returned to the creditor and any remaining debt is discharged using chapter 7 bankruptcy once the vehicle is repossessed and sold. This results in no more money owed to the credit union and all of the debts associated with the institution being discharged at the end of your chapter 7 bankruptcy case.
I advice clients in this situation is to replace their vehicle before I file a chapter 7 bankruptcy petition, and then give the credit union creditor the vehicle with the loan on it. This can prevent complications during the bankruptcy. A qualified bankruptcy lawyer in Cincinnati should also discuss another option with clients who need debt relief. You could file chapter 13 bankruptcy instead of chapter 7 bankruptcy if there is cross collateralization due to credit union debts. I offer a free comprehensive chapter 13 bankruptcy guide on my Cincinnati bankruptcy attorney website as well.
How does filing for chapter 7 bankruptcy affect my cosigners?
Usually cosigners are close friends and family members who care about you and wanted to help you out. What happens to them if you file for chapter 7 bankruptcy though? Are they off the hook too or do they get stuck with the entire amount of the debt owed? Unfortunately creditors can still collect a debt that has been discharged in chapter 7 bankruptcy from any cosigner on the debt even though they can not come after you because of the discharge from your bankruptcy case.
Any debt that you reaffirm during chapter 7 bankruptcy will not be collected from cosigners unless you do not make the required payments though.
Your brother is the cosigner on your auto loan and you want to file chapter 7 bankruptcy. If you reaffirm the debt then your brother will not be affected unless you fail to make payments just as if you had not filed for bankruptcy protection. If you fail to reaffirm the auto loan debt then the creditor can and usually will go after your brother for the full amount owed because they can not legally come after you for a debt that was discharged during chapter 7 bankruptcy.
When I file your chapter 7 bankruptcy petition with the court as your bankruptcy lawyer in Cincinnati we must include any people who have cosigned on any debts that you owe. Your cosigners will get a notice about your chapter 7 bankruptcy case from the court so don’t let them be caught by surprise. Discuss your filing beforehand so that relationship problems don’t develop because you filed for chapter 7 bankruptcy protection.
Chapter 7 bankruptcy and utility bill debt.
The bankruptcy court usually views utilities as unsecured debt, and these debts can be discharged with a chapter 7 bankruptcy case just like old medical bills or your credit card debt. As a Cincinnati bankruptcy lawyer I do warn clients that when utility debt is discharged the utility company could require a security deposit the same way they charge their new customers. Any security deposit you previously paid to the utility could be kept in order to offset the debt you owe them when the bankruptcy petition was filed.
In my experience as a bankruptcy lawyer in Cincinnati even if you are not behind in paying for your utilities the unpaid balance owed but not yet billed for is often discharged by the company. This is technically the right and legal thing to do even when you do not list the debt on your chapter 7 bankruptcy petition.
For example: Your electric bill is due on April 26, and you file for chapter 7 bankruptcy on April 13. The bankruptcy law says that any amount which was owed up until April 13 can be discharged. The utility company should discharge the full amount up until the day that you filed for bankruptcy protection.
What if you owe student loan debt? Can chapter 7 bankruptcy eliminate this debt?
Many of the clients that I see as a bankruptcy lawyer in Cincinnati have student loan debt, and generally this type of debt can not be discharged using bankruptcy. It doesn’t matter whether your student loan was from the federal government or if it involved a private lender instead. In theory there are certain exceptions allowed under the bankruptcy law but these are very narrow and can be difficult to achieve for most clients in reality.
The only way to eliminate student loan debt during chapter 7 bankruptcy is to prove that you could not possibly pay any part of the debt even in the foreseeable future. As a Cincinnati bankruptcy lawyer I advise clients that if they can make it into court to make the argument that this debt should be discharged then they have lost the argument before they start because they could actually make it into the court in the first place.
Student loans are guaranteed by the United States government. It is necessary to sue the government in order to discharge student loan debt, and this is rarely successful. As an experienced bankruptcy attorney in Cincinnati I typically do not get involved in cases where the client is trying to discharge student loan debt because it is so unsuccessful and is usually a big waste of money for my client.
If you have some disability that makes you truly unable to pay back student loan debt then we will discuss other options I can help you with this debt as a Cincinnati bankruptcy lawyer and debt relief specialist so that you gain student loan forgiveness without resorting to chapter 7 bankruptcy.
One case I took on as a bankruptcy lawyer in Cincinnati was a woman who had a significant amount of student loan debt, but there were very unusual circumstances. I fought tirelessly until I got her the help that she needed and deserved. When the woman arrived in my office for her initial consultation she was on oxygen and was confined to a wheelchair. I knew I could probably win her case but it never even went to that point.
The creditor discharged the student loan once we proved that the woman was seriously disabled and after a creditor meeting we did not even have to file for chapter 7 bankruptcy protection. As an experienced bankruptcy lawyer in Cincinnati, Ohio I have found that it is best to use the student loan process to work through this type of debt rather than resorting to the bankruptcy court and a chapter 7 bankruptcy filing.
If you have Federal student loan debt then there are several different options I can explain and help you with as your Cincinnati bankruptcy lawyer and debt relief specialist. These include programs that offer loan forgiveness and income based repayment plans. Private student loans can be very difficult though, because the private creditors know that you can not resolve this type of debt using chapter 7 bankruptcy or chapter 13 bankruptcy. These creditors like to be difficult and they will sue at the first chance that they get.
When dealing with private student loan lenders my experience as a Cincinnati bankruptcy lawyer has been that a chapter 13 bankruptcy petition in this situation will usually offer you the best protection possible. This case will go on for between 3-5 years usually, and during this time you are protected. While your chapter 13 bankruptcy case continues your situation could change. You could gain more income and most if not all of your others debts could be discharged and eliminated. This could free up some extra income that can be used for student loan payments instead.
Rent to own debt and chapter 7 bankruptcy.
It is possible to discharge rent to own debt using chapter 7 or chapter 13 of the bankruptcy code. You need to be aware that typical rent to own contracts include a stipulation that the merchandise must be returned to the creditor in the event that you file for bankruptcy protection and your debt will be discharged. As a bankruptcy lawyer in Cincinnati my advice to clients is to return the property rather than using debt reaffirmation to keep it and continue with payments. These companies usually charge outrageous prices for the property worth far less and they are a bad deal for consumers.
One exception I make as a Cincinnati bankruptcy attorney is a client who has almost completed a rent to own contract and who is close to paying the debt off completely. In this situation it makes more sense for you to finish paying off the creditor so that you keep the merchandise that you have already paid so much for.
If I file for chapter 7 bankruptcy what happens to my tax refund?
In a chapter 7 bankruptcy case you will get limited protection for your tax refund but only a small amount is protected, generally just $800 but it is much more complicated than that. An experienced bankruptcy attorney in Cincinnati can help you understand how your tax refund could be protected or used in a chapter 7 bankruptcy case.
The specific date that your chapter 7 bankruptcy petition was filed with the court will be used to calculate exactly what amount of your tax refund you are entitled to and how much the bankruptcy trustee can try to claim. The date you file for bankruptcy is the important part, not the date that you actually receive your income tax refund.
Your chapter 7 bankruptcy petition was filed on June 30 after half the year has gone by. A typical chapter 7 bankruptcy case takes approximately 5 months after the petition is filed for the discharge to be ordered. Your case would usually be finished by November or at the very latest December of that year.
When the bankruptcy attempts to take half of the tax refund that you receive the following March or April this may take you by surprise because your chapter 7 bankruptcy is done. The date you receive the refund is irrelevant, it is when you file the chapter 7 bankruptcy petition with the court that matters when it comes to the impact on any tax refund you get.
Since you filed for chapter 7 bankruptcy when the year was half over on June 30 the bankruptcy trustee has the right to attempt to take half of the tax refund that you get in spite of the fact that you won’t get this money until the following year. If you will get back $5,000 then $2,500 will be part of your chapter 7 bankruptcy case, half of the amount you get. You are only allowed to keep $800 of this $2,500 under the chapter 7 bankruptcy code. That means the trustee can keep $1,700.
In addition to being a bankruptcy lawyer in Cincinnati, Ohio I am also a certified debt counselor and certified credit counselor, and I can tell you that chapter 7 bankruptcy tax refund analysis can be very complicated and complex. An additional factor that should be taken into consideration is that some parts of a tax return can not legally be touched by the bankruptcy trustee in a chapter 7 bankruptcy case.
In the previous example if your $5,000 tax refund included a $3,000 earned income credit then everything changes to your benefit. The earned income tax credit is off limits to the bankruptcy trustee, leaving only $2,000 that you must claim for your chapter 7 bankruptcy case. Since you filed when the year was half over only half, or $1,000 can be kept by the bankruptcy court. Out of this $1,000 you are usually able to claim an exemption of up to $800. Out of a $5.000 tax refund you may only be out $200, and this amount is so little that the bankruptcy trustee would rarely try to take it from you.
The example above is just one, and there are a number of other rules and exceptions under the bankruptcy law that could impact income tax refunds as well as other tax issues when you file for chapter 7 bankruptcy protection.
When I take on a client who has consulted with me as a bankruptcy lawyer in Cincinnati, Ohio I usually do an analysis of their tax withholding as part of their chapter 7 bankruptcy case. This allows me to help them reach a full financial recovery and get a handle on their credit and debt once and for all. With the $5,000 example I would see right away that the income refund amount was large and discuss this fact with my client. I would point out that the client could see $416 each month in their paycheck if their tax withholding was not excessive and suggest making changes in this direction.
As a Cincinnati bankruptcy attorney I would advise the client to adjust their withholding exemptions so that they lose less of their check each week to taxes and see a bigger income as a result. This decreases any income tax refund that you may lose to the bankruptcy trustee when you file for chapter 7 bankruptcy protection, and eventually you will reach a refund and tax owed to zero for the year. This eliminates the potential for the bankruptcy trustee to take money from you because you filed for bankruptcy.
Will I lose everything by filing for chapter 7 bankruptcy protection?
A majority of people today understand that you will not lose everything if you file for chapter 7 bankruptcy. As a bankruptcy attorney in Cincinnati I still have people who worry about this though. Most fo my clients do not have a clear understanding of the types and amounts of property that can be kept under the chapter 7 bankruptcy laws but they do understand that they will not lose everything.
The chapter 7 bankruptcy laws provide a furnishings and household goods equity exemption for each person who files for bankruptcy protection. What does this mean though, and how does this exemption work? What would happen if you took all of the furnishings that you had and all of the household goods that you have accumulated over the years and put then out in an enormous yard sale?
At the end of the day you would realize two things:
Only a fraction of these items sold and you would not have made $10,000 from the yard sale, usually far less than this amount. Your used property is valued far less than the same item in new condition, and often it has no resale value at all. In order to pass the test in chapter 7 bankruptcy you do not have to be able to replace your items for the $10,000, this would usually be impossible. You only have to show that these items have a value of under $10,000 for the exemption in the current used condition that they are in. This typically means that a chapter 7 bankruptcy case will protect most if not all of these belongings that you own.
As a bankruptcy lawyer in Cincinnati, Ohio I do warn my clients that some property types are not protected if you file for chapter 7 bankruptcy though. One of these is stocks and bonds, and this can be a problem if you own employee stocks but otherwise you would be a good chapter 7 bankruptcy candidate. A stock value assessment as part of your bankruptcy case could value these stocks at $20,000 and put you at risk of losing it. As your Cincinnati bankruptcy lawyer I will work with you to find a different way to solve your debt problems so that you don’t end up losing this stock.
Exemption planning with chapter 7 bankruptcy.
Estate planning can be another big issue with chapter 7 bankruptcy, I see this complication all the time as a bankruptcy lawyer in Cincinnati, Ohio. Often parents who own real estate will put the property into the name of their adult child in order to avoid issues with probate once the parents are gone. Typically the parents still live in the home that is paid for but the property title has been put in the adult child’s name for estate planning purposes. Since the adult child does not reside in the property if they file for chapter 7 bankruptcy they have no equity exemption in the property. This means it is possible for the bankruptcy trustee to try and claim the property as part of the bankruptcy case.
This is a very common situation that I see frequently when I consult with clients. The child can not just transfer title to the property back to the parents because this is illegal if you do it within a certain time before you file your chapter 7 bankruptcy petition. This is one of the biggest no-nos that I caution against because it could lead to criminal charges of bankruptcy fraud or the case being thrown out. This is a difficult situation but as a Cincinnati bankruptcy lawyer and debt relief specialist I can help you with extensive planning that will give you the best possible results in your specific situation.
We can take certain steps which will help protect certain property that you would normally lose if you filed for chapter 7 bankruptcy. This is called exemption planning, it is perfectly legal, and it is an appropriate way to give you the best results possible from your bankruptcy case. Any bankruptcy lawyer in Cincinnati or any other city who is not well experienced and knowledgeable in exemption planning has no business representing clients in a chapter 7 bankruptcy case in my opinion.
During exemption planning we can convert certain assets that are at risk of being lost in a chapter 7 bankruptcy case into assets that the bankruptcy law protects so that you retain them instead.
As a married couple there is $10,000 that you have between the balance in your bank account and cash, and you have decided to file for chapter 7 bankruptcy protection. Depending on your age and what time of year it is one move that we could make would be to take that $10,000 to purchase private IRAs. When this is done towards the end of the year it can be highly effective. Both of the spouses are allowed to make the maximum contributions allowed by law in private IRAs in the month of December, and then do it one more time at the end of the following year as well.
With chapter 7 bankruptcy the bank balance amount and the cash would be lost, but when these assets are converted into IRAs this money is protected and the couple will come out $10,000 ahead. This is proper estate planning, and as a bankruptcy lawyer in Cincinnati, Ohio and a certified debt specialist I can help you do this.
Retirement accounts are usually fully protected under chapter 7 bankruptcy.
Most retirement accounts are fully protected and the bankruptcy laws do not allow you to lose these accounts if you file for chapter 7 bankruptcy but this is not always the case. There are some exceptions and special circumstances that I can explain as an experienced Cincinnati bankruptcy lawyer. Employer offered retirement accounts are almost always protected in a chapter 7 bankruptcy case, but I have found while practicing as a bankruptcy lawyer in Cincinnati that some retirement accounts are not protected under the bankruptcy code. Usually these are retirement accounts in name only and they do not meet the definition for this type of account under the bankruptcy laws.
With one example you may have invested into a certain mutual fund because you intend to use the investment proceeds to retire on when you are older. In your mind this may be a retirement account but the chapter 7 bankruptcy laws definition of this type of account may not agree. If this is the case then the retirement account may not have protection if you file for chapter 7 bankruptcy.
Another complex situation is inherited retirement accounts. Recently a court rules that any inherited retirement accounts do not always receive automatic protection for individuals who file for chapter 7 bankruptcy protection.
Will I need to go to court to file the chapter 7 bankruptcy petition or attend hearings for my case?
As your bankruptcy lawyer in Cincinnati, Ohio I will handle filing your chapter 7 bankruptcy petition, and you will not normally have to go to any bankruptcy hearings because I will represent you. There are normally bankruptcy meetings which are held with the bankruptcy trustee instead of a judge, and these usually take place in a typical meeting room and not a court room. As an experienced Cincinnati bankruptcy attorney I can not stress to my clients enough how inconsequential the bankruptcy hearing is.
Once your case has reached the hearing stage any problems are almost impossible to fix, but you are normally not aware of any problems in the first place until a hearing happens. Before any bankruptcy hearing proper preparation and accuracy are critical. The last thing anyone wants is a surprise at a 341 meeting.
In my experience as a Cincinnati bankruptcy lawyer I often see surprises at 341 meetings. Not long ago while I was in bankruptcy court for a client I was mesmerized while the bankruptcy trustee assigned to a bankruptcy case was questioning a lawyer concerning a personal injury settlement that was listed on the client’s chapter 7 bankruptcy petition.
In this case a lack of proper preparation cost the attorney and his client big time. The client did not engage in intentional dishonesty, they thought they explain the entire story and disclosed the personal injury settlement. Since the bankruptcy lawyer did not question this account any deeper he did not realize that the account was inherited when the client’s mother received a personal injury settlement and then passed away.
Most of the time chapter 7 bankruptcy offers a maximum personal injury award exemption of $20,000, but this is not allowed for awards that are inherited. Since the personal injury award was not a result of the client’s personal injury but rather inherited from his mother on her passing the funds were not protected because they were not allowed under an exemption. The bankruptcy trustee took the funds because the bankruptcy lawyer was not fully prepared and aware of all the details. I left court and do not know how this specific case ended but I bet that the relationship between the bankruptcy attorney and his client changed forever that day and things became much more tense between them.
As an experienced bankruptcy lawyer in Cincinnati I would never let this happen to me or to one of my clients. Every situation is unique, and I main many different checklists that cover a wide range of case aspects, details, and items. Every case I handle is checked, then double checked, and then checked again so that we can ensure full understanding about every single facet and details of your case and your unique situation. Once this is done then we know we can offer our client the most protection possible and the best outcome that can be achieved in a chapter 7 bankruptcy case. When the consequences of being prepared are do devastating there is no such thing as too much preparation or having too many details and facts.
If you are thinking about chapter 7 bankruptcy protection then you need to be careful about choosing the right bankruptcy lawyer in Cincinnati, Ohio. Once your chapter 7 bankruptcy petition is filed it is very hard or even impossible to fix any mistakes or correct any errors, and the damage is done. Once you file for bankruptcy you do not have the option of changing your mind just because you find out that that property will be lost and you are stuck in this course of action.
You need a real fresh start and a legitimate financial recovery, and this means a successful outcome and financial reorganization are essential. Bankruptcy law is a specialized area of the law and the subject is highly technical and extremely complicated. Why would you take a chance and choose an inexperienced Cincinnati bankruptcy lawyer with something so important riding on the outcome?
When you pick a bankruptcy attorney in Cincinnati, Ohio this legal professional needs to be a board certified bankruptcy and debt relief specialist. No one would have complicated business tax returns handled by a middle school math teacher. If you needed surgery to remove your appendix you wouldn’t have your family doctor handle this operation. It is the same thing with bankruptcy. If the Cincinnati bankruptcy attorney is not a specialist with board certification then they should not be the lawyer who handles your chapter 7 bankruptcy case.
Obtaining a true fresh start and rebuilding your credit once your chapter 7 bankruptcy is finished!
A chapter 7 bankruptcy is supposed to give you a fresh financial start, and it is a step in the right direction, but it is important that you recognize that it is only the first step and you must finish what you started with this step. A lot of bankruptcy lawyers in Cincinnati, Ohio are done when your debts have been discharged and your bankruptcy case is finished. I do not know of any other bankruptcy attorney in the entire Ohio state area who offers the type of credit rebuilding and credit report collection program that I offer my clients.
I am the only bankruptcy lawyer in Ohio who is a Ohio Supreme Court recognized bankruptcy specialist and also a certified credit counselor and certified debt arbitrator. These numerous designations simply mean that I can do much more for clients than just file bankruptcy cases. I go further and assist my clients so that they get the financial recovery that they need and they can rebuild their credit after their chapter 7 bankruptcy case is done.
Attorneys are not taught this in law school although I believe that they should be!
Many clients are concerned that bankruptcy will ruin their credit because this may be listed on their credit reports for up to a decade after they file for chapter 7 bankruptcy. If you do not take the steps that I recommend as a bankruptcy lawyer in Cincinnati, Ohio then it can be true but this does not have to be the case. Making sure that your credit report is fully accurate and up to date, and taking steps to improve your current credit score, after your chapter 7 bankruptcy case is finished can improve your credit much faster and give you a better outcome.
As a Cincinnati bankruptcy attorney and debt specialist I have found that the best outcome means following a specific plan once your chapter 7 bankruptcy petition is filed. When my clients follow my advice they often see a credit score which can reach 650 or even more, they have a clean and accurate credit report, and they often qualify for a vehicle loan or a mortgage for a home within just a few years of their chapter 7 bankruptcy discharge without the higher interest rates that they would pay otherwise. Some effort is required to achieve this though, it doesn’t just happen automatically.
Managing your credit report after chapter 7 bankruptcy.
Most consumers are not aware that a significant amount of debt discharged in bankruptcy each year, estimated at around $1 billion, is still being paid for by consumers. Many times creditors do not update their credit report data after you file a chapter 7 bankruptcy petition with the court. Now you do not actually owe the debt, it has been discharged, but it is still showing as a valid debt on your credit report.
A lot of creditors take the position that they have not engaged in any wrong doing because they are no longer reporting that you owe the debt. In fact they are not reporting anything about you or your debts anymore. When this happens we can force the creditors to clean up their entries on your credit report with very little effort by properly disputing every inaccurate or incorrect entry. I utilize this dispute method as a bankruptcy lawyer in Cincinnati so that my clients fully recover after their chapter 7 bankruptcy.
Some people look for credit repair businesses, companies that go by names such as Lexington Law or Bradley Allen, in the hopes that these firms can help boost their credit score without any effort once they have gone through a chapter 7 bankruptcy. I do not know the success rates of these companies due to no personal experience dealing with them, but some of my clients have hired these types of firms and were not very successful or happy about their experiences with these firms. Mu understanding is that these firms dispute all credit report items in the hope of being successful. My experience as a Cincinnati bankruptcy lawyer is that this brute force method is not the best one to use in order to get the desired results.
Rather than trying to strong arm the credit reporting agencies I use a scalpel approach which tends to work better and get the best possible results. I will analyze every individual entry on my client’s credit reports and will only dispute entries that are wrong AND that actually harm my client. There are a number of credit report entry errors that could help raise your credit score instead of harming it. It requires less time and effort to simply dispute everything listed on your credit report rather than performing an individual entry analysis but this could repair mistakes that are favorable as well as those errors that harm your credit. The right way means taking the time necessary to get you the best possible outcome and results.
How long will it actually take to recover from chapter 7 bankruptcy?
The amount of time that it will take for you to fully recover after a chapter 7 bankruptcy will depend on the approach that you take after your debts have been discharged and your bankruptcy case is closed. Some of my clients say they intend to use a cash only lifestyle once their chapter 7 bankruptcy case is finished, and this sounds like an attractive idea but in all honesty it is not the right way to improve your credit in the shortest time possible.
As an experienced bankruptcy lawyer in Cincinnati, Ohio I advise my clients to use credit properly so that their credit score improves. I also caution clients against trying to apply for too much credit shortly after their chapter 7 bankruptcy because this could have the opposite effect of what you intended and actually hurt your credit score instead of making it better. In order to achieve a full financial recovery and get the best possible results you will need to take the right approach.
I can help you find the right approach, and when you understand this plan and follow it step by step recovering from bankruptcy shouldn’t take longer than a year on average. After this point you may qualify for an auto loan without paying an outrageous interest rate as long as you have followed the plan to the letter. Usually a home mortgage is possible with 3-5 years at the most after your chapter 7 bankruptcy as long as the income requirements for this type of loan are met. A chapter 7 bankruptcy should not keep you from these goals.
Chapter 7 bankruptcy guide conclusion.
When used properly a chapter 7 bankruptcy can be a very powerful and highly effective tool for financial reorganization. As a bankruptcy lawyer in Cincinnati roughly 75% of the cases that I take on involve chapter 7 bankruptcy. It is important to note that just because you qualify to file for chapter 7 bankruptcy this does not always mean that this is the best solution for your financial situation and your circumstances. Sometimes chapter 13 bankruptcy may offer a greater degree of flexibility, extra options, more choices, and a better possible outcome than filing for chapter 7 bankruptcy.
The information that the internet offers on chapter 7 bankruptcy is normally not very helpful, and it is often misleading, deceptive, or flat out incorrect. The complexity of the chapter 7 bankruptcy laws and requirements means that you can not properly apply the information that you find researching on the web even when this information is complete and accurate. In order to get the desired outcome you need a qualified bankruptcy lawyer in Cincinnati who is a certified specialist in this legal area and who has decades of experience in this field helping clients resolve their financial problems and debt issues.
You want answers, and you won’t find them even if you search for days or weeks on the internet and are exhausted trying to figure out the means test and the chapter 7 bankruptcy exemptions allowed under the law.
As an experienced Cincinnati bankruptcy attorney I have had a lot of success filing for chapter 7 bankruptcy even when the client fails the means test or their income is higher than the median income in their specific area. In very little time I can determine whether a client who has an income below the median income and who is not required to even try the means test will fail to be approved for a chapter 7 bankruptcy filing and why their case will not be approved by the bankruptcy court.
Unfortunately I see bankruptcy cases dismissed due to small errors all the time, resulting in wasted money on credit counseling courses, filing fees, and other expenses related to a chapter 7 bankruptcy case. This happens because the bankruptcy lawyer in Cincinnati, Ohio who is chosen does not have the necessary experience and knowledge needed to be successful.
It is not easy or simple to file a successful chapter 7 bankruptcy case, and even when this is accomplished it is just the first step towards a full and complete financial recovery in a bigger process that involves credit report correction and credit rebuilding efforts once a bankruptcy discharge is received.
If you are thinking about chapter 7 bankruptcy then you should discuss this move with a qualified Cincinnati bankruptcy lawyer. Normally some form of bankruptcy is the right option in this case but a chapter 7 bankruptcy may not be the best choice in your specific situation and circumstances. Sometimes this step can cause you a tremendous amount of stress and you may lose property under the chapter 7 bankruptcy laws.
If a chapter 7 bankruptcy petition is the right choice for you then the right bankruptcy lawyer in Cincinnati, Ohio can use this extremely effective tool to help you eliminate debt, formulate a balance budget, and put you on the path to a true financial recovery that could be possible in far less time than you think.