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OHIO BANKRUPTCY LAWS

Like in most states, Ohio's bankruptcy laws are designed to help out consumers who are in over their heads on their bills and debts and can't do any better than the minimum payments.  Bankruptcy should only be considered as a last resort in cases where the individuals can't make their way out of debt with a Debt Management Plan, or are being threatened with foreclosure, or have been hit with something unexpected like a medical emergency, divorce or job loss.  Bankruptcy filings cannot discharge things like IRS tax debts, alimony, student loans, child support or court-ordered settlements.  They can, however, wipe the slate clean on other debts (such as credit card bills) and give Ohioans a reprieve and a chance to start over.

Ohio offers Chapter 7 as a "total liquidation bankruptcy" option.  Chapter 7 is common for people who have been laid off and have little real property other than the necessities such as furniture and clothing.  Federal law now requires that Chapter 7 filers complete a "means test" and a session with a credit counseling firm to try to lay out a budget and examine their real financial situation.  Chapter 7's will include a $299 filing fee (with attorney's fees over and above that) and may require some personal items to be sold off by a court-appointed trustee to go towards some of the debt.  Past that, most other financial obligations (credit cards, medical bills, parking tickets, payday loans, some personal loans) will be called off.  Collection efforts are also supposed to stop at the time of filing the papers.  

Prior to filing a Chapter 7, your bankruptcy attorney will need a full audit of things such as:

Chapter 7 filings can move fairly quickly, with all debts completely discharged in 3 to 6 months.  Persons who have filed Chapter 12 or 13 bankruptcies in the last six years, as long as they paid down 70% of their previous debt and executed their payoff plan to the best of their ability.  A Chapter 7 filing in the previous eight years, though, will disqualify you from another Chapter 7.  

Ohio also offers a Chapter 13 "restructuring bankruptcy" option. Unlike Chapter 7, Chapter 13 filings do not require a means test.  They do, however, require completion of credit counseling.  Without that certificate of completion, there could be a window of time for creditors to take action such as repossession or foreclosure.  They are more suited to people who still have an income or who have considerable equity in their homes (and would like to keep it).  Chapter 13 involves a negotiated settlement with creditors, with a monthly payment being made to the court's trustee and then distributed to pay off bills.  Chapter 13 is a good option in cases where:

 Within 15 days, the bankruptcy judge is obligated to send a notice of the bankruptcy petition to all creditors, at which point collection efforts are supposed to stop.  Chapter 13s are only workable in cases where there's enough money coming in for basic living expenses after meeting the court-mandated payment to the trustee.  Otherwise, Chapter 7 might be a better alternative.

Chapter 13 filers are only eligible if they carry no more than $1,010,650 in secured debt (mortgage, cars, home equity loans, etc) and $336,900 in unsecured debt (credit cards, medical bills, etc).  

 There are also a number of federal exemptions that can be declared in conjunction with Ohio's bankruptcy exemptions.  Please note that there are advantages to filing bankruptcy forms online, as well  the debtor may be able to retain things like pension benefits, retirement accounts, medical support devices or insurance policies. 

 

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*Always consult a legal professional in person before taking any legal action related to your case or situation.