Filing Chapter 7 Bankruptcy In Ohio
Chapter 7 Bankruptcy is a liquidation of your assets and is called a straight bankruptcy. Many individuals who file Chapter 7 Bankruptcy will not have assets. This is called a “no-asset” case. The first step prior to filing Chapter 7 Bankruptcy is to contact an Ohio Bankruptcy Attorney who can help determine if you can qualify for Chapter 7 Bankruptcy. If you can, a trustee is appointed by the bankruptcy court to sell your non-exempt property and use the proceeds of the sale to pay your creditors. Creditors will be paid in the order designated under federal bankruptcy law. It will take approximately four to six months to discharge your debt.
Chapter 7 Bankruptcy is the most common type of bankruptcy because it is easy, inexpensive and quick. Most unsecured debt will be discharged. Dischargeable debt may include hospital bills, personal loans and credit card debt. Married couples, partnerships, individuals and corporations may all file Chapter 7 Bankruptcy if they qualify.
Your Ohio Bankruptcy Attorney can file your bankruptcy petition, the schedule of your liabilities and assets, a list of your income and expenses and all information about contracts or leases. The filing of the bankruptcy petition will force all of your creditors to temporarily stop their debt collection efforts. Collection efforts may continue if the bankruptcy judge determines there is cause.
Under current bankruptcy law, it is more difficult to qualify to file Chapter 7 Bankruptcy. The Bankruptcy Abuse Prevention and Consumer Act (BAPCPA) was passed in 2005, and requires individuals to pass an income test to file Chapter 7 Bankruptcy, complete a credit counseling course prior to filing bankruptcy and completing a financial management course prior to the discharge of an individual’s debt.
The new income test will measure your monthly income against other incomes for Ohio residents of similar size. If your median income is less or the same as the other residents of Ohio, you can file Chapter 7 Bankruptcy. If you median income is higher than other Ohio residents, you will have to complete additional “means testing”.
The means test is used to determine how much disposable income you will have to repay your creditors. The means test will take your gross income and subtract certain expenses including: home mortgage, car payment, child support, school tuition (up to $1650), and taxes owed. If you have enough disposable income to pay $6,000 or $100 per month over the next 60 months in unsecured debt payment, you most likely will have to file Chapter 13 Bankruptcy. If you fail this test, but you could pay 25% of your disposable income toward debt over the next 60 months, you may have to file Chapter 13 Bankruptcy.
State median data is provided by the United States Trustee Program. For the State of Ohio, after March 15, 2009, the median income for a single wage earner in the state of Ohio was $42,458 and for a family of two it was $52,922. For a family of three it was $62,251 and for a family of four it was $74,234.
All information for means testing is general in nature and should not be considered legal advice. It is very important to talk to an Ohio Bankruptcy Lawyer who can help you determine if you are eligible to file Chapter 7 Bankruptcy.
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