We don’t want to think about filing for bankruptcy. If you have too much debt and require something that will help you to “start over”, you should look into the various types of bankruptcy. One of them is Chapter 13, and you can talk to a lawyer to help you decide if this would be the right option for you.
What is Chapter 13 bankruptcy?
Chapter 13 bankruptcy is a means to reorganize your consumer debt. It allows people with debt to repay their financial obligations in an affordable manner that works for their schedule. Typically, the individual is granted the ability to make a monthly payment over a period between three and five years. This option is made available so that you gain control from underneath your debt, and so that your creditors no longer can repossess your vehicle or foreclose on your house.
You’ll only have to pay an agreed-upon portion of your debt and once you do this, the rest of this eligible debt will be discharged so you don’t have a responsibility to pay it back. After you have this setup, creditors will be forced to stop collection activity during your term of repayment. It’s an ideal choice for homeowners who have more equity in secured assets that they wish to keep. Also, this is the category of bankruptcy that would apply to someone who is in a higher income bracket that makes them unable to qualify for Chapter 7 bankruptcy.
You may be wondering what the process of filing for Chapter 13 bankruptcy in Dayton Ohio looks like.
Gather Your Paperwork
Regardless of the type of bankruptcy, it’s necessary to gather up any documents that relate to your debt and financial situation at the time. This includes major financial transactions for the past two years, your monthly living expenses, property (all of your possessions and assets, even outside of real estate), and your debts (both secured and unsecured). Also provide your last two year’s worth of tax returns, car titles, documents for loans, and deeds to real estate that you own.
The court assumes legal control of your debts and property that isn’t covered by Ohio exemptions. The court will appoint a trustee to your case. They will ensure that your creditors are paid the highest amount possible after reviewing your paperwork, including your exemptions and assets that are in your possession. This individual may choose to challenge an element from your case while it’s still in proceedings.
The Filing Process
Get the help of a qualified bankruptcy lawyer to determine the property that’s exempt from seizure based on Ohio exemptions. You or your attorney need to file a petition as well as other forms at the Ohio bankruptcy court for your district. These are known as schedules and this is where you’ll describe your recent financial transactions and your financial status. You must be honest about all questions included in these schedules, otherwise, it could jeopardize your ability to receive your debt relief plan.
Requirements for Chapter 13 Bankruptcy
In order to file a Chapter 13 bankruptcy, you need to submit a proposed repayment plan. This is calculated by figuring out how much you have left after your monthly expenses. Then, the lawyer will determine how this amount will be divided and sent out to your creditors. You must pay any priority claims (which include back child support and taxes) in full, and the unsecured debts like medical bills and credit card debt typically are paid back only in part. The actual portion of your original unsecured debt will be decided after the judgments of those who are involved in your case.
Your repayment plan needs to pass the following three tests before it’s approved:
- It needs to be delivered in good faith (meaning with sincerity of intention).
- You must pay your unsecured creditors at least the amount you would if you’d gone through Chapter 7 bankruptcy proceedings. This usually would be the value of all of your nonexempt property.
- All of your disposable income needs to be paid into this plan for three years or more. In order to fulfill the test to pay at least the amount you’d owe for a Chapter 7 bankruptcy to your unsecured creditors, you can take up to five years.
Anyone who files a Chapter 13 plan must go to a hearing before a bankruptcy judge. At this hearing, they’ll deny or confirm your repayment plan. If this is confirmed and you pay as promised, the balance of your dischargeable debts will be removed once the term ends.
After you file the paperwork with the court, you’ll have an automatic stay immediately. Creditors won’t be able to make direct contact with you or produce a claim on your property from that day forward. It also stops foreclosure proceedings on your house. As long as you abide by the terms laid out in your Chapter 13 bankruptcy, you should continue to receive this benefit and steer clear of harassment from creditors.
What to Expect Afterwards
Around a month after you file for bankruptcy, your trustee will call for the first meeting of your creditors. You must attend this meeting that’s called the 341 Meeting of Creditors. One or two of your creditors may be there, especially if there’s any question that an aspect of your plan isn’t legitimate. Any negotiations are handled by the debtor or debtor’s counsel and the creditor, though the judge will intervene if they cannot reach a compromise.
Bankruptcy can be incredibly tricky and an upsetting matter. The sheer amount of work that must be put into preparing for your proceedings can make you want to avoid doing any of it. You’d do well to contact bankruptcy lawyers in Ohio to help you with each step so that you’re confident you are filing properly. It’s worthwhile to get this in motion so that you can have some relief from the weight of your debt and wipe your slate clean.