If you are facing the reality of having to potentially declare bankruptcy in Ohio, you may be considering Chapter 13 bankruptcy. If that is the case, you’ll need to understand what Chapter 13 assets you could potentially lose and what assets are exempt from your bankruptcy plan.
Are you worried about filing for Chapter 13 and having to sell your assets as part of your bankruptcy plan? If so, check out this article, where we will be discussing the basics around Chapter 13 bankruptcy and what assets you could potentially lose when choosing this option.
Understanding Chapter 13 in Ohio
Chapter 13 bankruptcy is a good option for Ohio residents who have substantial debt but do not want to have to liquidate the majority of their assets. It is often called a wage earners plan as it allows individuals who have a regular disposable income to pay off their debt with a repayment plan. Unlike Chapter 7 bankruptcy, it allows you to create a long-term repayment plan instead of having to liquidate all of your possessions to repay your creditors.
Chapter 13 repayment plans generally last between three and five years, and during this time, you are protected from any collection efforts from creditors. As long as you keep on top of your payments, you don’t have to worry about collection efforts, such as having property repossessed or your home foreclosed. Because of this, many individuals who file for Chapter 13 can still maintain ownership of high value property, such as real estate or vehicles.
Something to keep in mind when filing for Chapter 13 bankruptcy is that non-exempt equity will increase the amount of money you have to pay each month to any of your unsecured creditors. Because of this, some individuals may choose to sell off some of their non-exempt equity before filing for Chapter 13 to get a lower monthly payment amount.
Some of the benefits of choosing to file for Chapter 13 bankruptcy over another type of bankruptcy in Ohio include:
- It is removed from your credit report after seven years.
- It can extend debt terms so that they are suitable for your repayment plan.
- It has customizable repayment plans that allow you to prioritize certain types of debt.
- Most remaining unsecured debt balances will be discharged after finishing your repayment plan.
Chapter 13 Bankruptcy Eligibility
Although Chapter 13 bankruptcy is a good option for many individuals in Ohio, you must meet the eligibility requirements to file for this option. These eligibility requirements include:
- Have a steady and reliable income.
- Be up-to-date with your tax filings.
- Have secured debt that is under $1,257,850.
- Have not filed for Chapter 13 for two years or Chapter 7 for four years.
- Have unsecured debt under $419,275.
When you file for Chapter 13 bankruptcy you also have to calculate your bankruptcy payments, which will help to determine your eligibility. If the estimated monthly payments are above what you can pay, you will not be able to start the repayment plan since you cannot realistically follow the plan. However, there may be a way around this, which we will discuss a little later.
Another factor to keep in mind is that any changes to your income could result in your monthly payments changing as well. However, this is not dependent on your net income since your monthly payments are primarily based on your disposable income.
Ohio Bankruptcy Exemptions
No matter what type of bankruptcy you file for in the state of Ohio, there are some state-specific bankruptcy exemptions that help protect your assets. These exemptions can be quite complex depending on the market value of the assets, net equity, and dollar value, but here are some examples of assets that are exempt in some situations:
- Homestead
- Automobile
- Jewelry
- Personal property
- Cash
- Wild card
- Public assistance
- Veterans, disability, and workers’ compensation benefits
- Alimony and child support
- Supplemental security income
- Unemployment compensation
It is highly recommended that you get the assistance of a Chapter 13 attorney when considering whether you should file for Chapter 13. They will have extensive experience in Ohio bankruptcy exemptions and can help you figure out what your non-exempt and exempt assets are. This is a crucial step to take before filing since it will directly impact your monthly payment amount and the types of assets you may have to liquidate before filing.
Chapter 13 Assets and Potential Losses
The biggest advantage of choosing Chapter 13 bankruptcy in Ohio is that it does not require you to liquidate your assets. Instead, this bankruptcy option allows you to pay back your creditors through a repayment plan for a certain period of time. In fact, Chapter 13 can even put a stop to certain collection efforts, such as foreclosure proceedings.
However, a downside of Chapter 13 is that you will have to be able to make the monthly payments to keep up with your plan. If you have assets that are non-exempt equity, this increases the monthly amount, which can make it unrealistic for your income.
Some individuals choose to liquidate some of their non-exempt assets before filing so that they have more money on hand and can get a lower payment amount. In this type of situation, you may want to consider selling property before filing for Chapter 13 bankruptcy. Besides these specific situations, your assets should be protected from being sold when you file for Chapter 13.
If you believe that Chapter 13 is a good option for your financial situation, you need to hire a Chapter 13 lawyer. A lawyer will be able to help you decide if you need to sell any of your assets before filing and can help you throughout the filing process to ensure everything is correct.
Contact a Chapter 13 Attorney in Ohio
Are you ready to proceed with filing for Chapter 13 bankruptcy in Ohio? Richard P. Arthur, Attorney at Law, can help you decide if bankruptcy is the right decision for your situation, especially if you are considering Chapter 13. Richard P. Arthur has handled hundreds of bankruptcy cases in Ohio and can help you with every step of the bankruptcy process. Contact us today at 937-254-3738 for a consultation.