Chapter 7 bankruptcy can be a good option for Ohio residents if they are in a significant amount of debt that they cannot pay off. However, you will need to find out who qualifies for Chapter 7 bankruptcy since there are eligibility requirements specific to the state of Ohio.
Are you wondering if chapter 7 is a good fit for your situation and if you qualify? Check out this article, where we will be discussing how to qualify for chapter 7 bankruptcy and what the filing process looks like.
How Do You Qualify For Bankruptcy Chapter 7 in Ohio?
If you are new to the topic of bankruptcy in Ohio, you may not know what Chapter 7 entails and if it is a good fit for your situation. Chapter 7 bankruptcy is also known as liquidation bankruptcy, which helps individuals get relief from debt that they are unable to fix on their own. The process of Chapter 7 is finalized by receiving a discharge of all of your unsecured debt so that you can ultimately start fresh in a better financial situation.
Filing Chapter 7 bankruptcy also puts a stay on your creditors, ensuring they cannot continue any debt-collecting actions. This can protect you from any and all collection actions against you such as having your wages garnished or being sued. However, it does not protect you from repossession or foreclosure.
One way the Court determines if you qualify for a chapter 7 bankruptcy is determined by the Means Test. A means test is an income based test that helps courts determine whether or not a person is abusing the chapter 7 process by discharging their debt even though they seem to have the money to pay for some portion of it. This is one way to determine if you file for Chapter 7 or if you need to find a different bankruptcy option. Your best option is to hire a bankruptcy attorney who can help you navigate the means test to better understand if this is something you qualify for.
Here are the steps included in a means test that are relevant for your qualification for Chapter 7:
- Income level: In order to qualify for Chapter 7 and pass the means test, your household income has to be less than the median income in the state of Ohio. Keep in mind that this is compared to the median income of a family identical in size. These standards are updated twice every year in May and November.
- Expenses: Even if your household income surpasses the median income, you may still qualify for Chapter 7 depending on your deductions that are allowed. The Bankruptcy rules allow IRS standard expenses for a household of your size along with your deductions taken from your paycheck in order to determine if there is a sizable enough amount of monthly disposable income that can be used to fund some payments to your creditors.
What can and cannot be included as an expense or deduction is based on extremely technical rules and nuances set by case law. That is why you need to hire a skilled bankruptcy lawyer who can help you better navigate the Chapter 7 bankruptcy requirements compared to your finances.
Filing For Chapter 7 Bankruptcy
After finding out who qualifies for Chapter 7 bankruptcy, you may be ready to proceed with filing. Qualifying for Chapter 7 bankruptcy is very dependent on the filing process and following the steps correctly so that you don’t run into any issues. It is highly recommended that you hire a bankruptcy attorney to help you with the filing process so that you have a second pair of eyes and the help of somebody with extensive experience.
Here are the basic steps of the Chapter 7 bankruptcy filing process:
- Preparation: Before you begin the filing process, you want to gather all of the information and documents that will be required so that the process goes smoothly. This primarily includes financial documents, including your income statements, tax returns, assets, and liabilities.
- Filing: Next, you can begin by filling out the necessary forms to file a Chapter 7 bankruptcy petition in the local bankruptcy court. Once your paperwork is complete and it is filed, an automatic stay will take effect that helps prevent creditors from proceeding with any collection actions.
- Creditors meeting: Between 20 to 40 days after filing, you will need to attend a meeting of creditors with the bankruptcy trustee and your creditors, where you will answer questions about your finances under oath. Despite the name, many of these meetings are held without the creditors because they choose not to show up.
- Asset liquidation: Depending on the situation, the bankruptcy trustee may sell any non-exempt assets to repay your creditors. However, most Chapter 7 cases do not require assets to be liquidated because exemptions are high enough to protect assets.
- Financial management course: To receive a bankruptcy discharge, you are required to complete a financial management course after meeting with your creditors.
- Discharge: The Chapter 7 bankruptcy process is relatively swift, usually resulting in a bankruptcy discharge a few months after you have filed. A bankruptcy discharge releases you from personal liability for eligible debts, except for debts that are typically not dischargeable, such as taxes or student loans.
Information You Need When Filing
Besides your basic financial information, there are other important documents you need to provide when filing for Chapter 7. One type of information you need to collect is a comprehensive list of all of your creditors, which includes their names, addresses, and the amount of debt that is owed. It is important to be very thorough with this list as it will be the basis for your petition.
You also need to identify any property exemptions that will be safe from liquidation. A bankruptcy attorney based in Ohio can be very helpful in order to do this accurately since every state has different types of exemptions.
Before proceeding with Chapter 7 bankruptcy, you also have to complete a credit counseling course that has been provided by an approved agency. Completing this course shows the bankruptcy court that you have explored all other alternatives to bankruptcy and understand the implications of Chapter 7.
Contact a Chapter 7 Attorney in Ohio
Are you ready to officially begin filing for Chapter 7 bankruptcy in the state of Ohio? Richard P. Arthur, Attorney at Law, can help you navigate this complex process, including finding out if you qualify for Chapter 7 and if it is your best option. Richard P. Arthur has handled hundreds of bankruptcy cases in Ohio and can help you throughout the filing process. Contact us today at 937-254-3738 for a consultation.