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Bankruptcy FAQs

  1. My license has been suspended. Can bankruptcy help?
  2. Can tax debt be discharged through Bankruptcy?
  3. Can my student loan debt be discharged through Bankruptcy?
  4. How do I repair my credit after bankruptcy?
  5. I’m currently going through a divorce, should I file bankruptcy?
  6. Should I reaffirm on my mortgage after Chapter 7 Bankruptcy?
  7. I’m behind on my car loan, can bankruptcy help?
  8. My wages are being garnished, can bankruptcy help?
  9. Can Bankruptcy eliminate my second mortgage or remove judgment liens?

My license has been suspended. Can bankruptcy help?

Yes, in the state of Ohio, if your driver’s license has been suspended, filing for bankruptcy can allow you to recover your license from suspension and get back on the road to financial solvency-Ohio law categorizes reinstatement fees as one of the many debts that can be discharged or eliminated through Chapter 7 or Chapter 13 bankruptcy. There are certain cases where the fees cannot be discharged through bankruptcy, such as drug or alcohol related offenses, criminal offenses, or unpaid child support. An experienced bankruptcy attorney at Fesenmyer Cousino Weinzimmer can assist you with filing a bankruptcy petition and then you can take it to your local Ohio Bureau of Motor Vehicles (BMV) to get your license reinstated. There, a representative will review your petition and will remove the reinstatement fee from your record.

Can tax debt be discharged through Bankruptcy?

If you do owe back taxes to the federal government, Chapter 7 bankruptcy is usually the best option to have the debt discharged, so long as the debt meets certain requirements. You can discharge federal income tax debt through Chapter 7 bankruptcy if all of the following conditions are true:

  • The taxes owed are income taxes
  • You did not commit fraud or willful evasion of taxes
  • The debt is at least three years old
  • You filed a return for the taxes in question: You must have filed a tax return for the debt you wish to discharge at least two years before filing for bankruptcy
  • You pass the “240-day” rule: The income tax debt must have been assessed by the IRS at least 240 days before you file your bankruptcy petition, or must not have been assessed yet

Another option to resolve income tax debt is to repay your taxes through the life of a Chapter 13 repayment plan, which can last between three to five years. The amount of tax debt that you would pay through the plan depends on whether the debt is priority or non-priority taxes. Non-priority taxes must meet the criteria outlined above, and are usually only paid back at a percentage of the outstanding amount due. If your tax debt does not meet the criteria above, that’s okay, too. Chapter 13 bankruptcy does allow you to repay your priority tax debt through the life of the payment plan. In a Chapter 13 bankruptcy you do not have to pay the priority debt immediately. This means that through Chapter 13 bankruptcy, you can protect your property and income.

Owing money to the government can be stressful, both emotionally and financially. Fortunately, Chapter 7 and Chapter 13 bankruptcy can help mitigate the stress of paying back the debt and get you back on track to financial stability. If you owe back taxes to the government and would like to know how Chapter 7 or Chapter 13 bankruptcy could help, or if you have other debts that might qualify you for Chapter 7 or Chapter 13 bankruptcy, call Fesenmyer Cousino Weinzimmer today at 614-228-4435 (Columbus), 937-222-7472 (Dayton), or 877-654-5297 (Cincinnati) or send us a message here.

Can my student loan debt be discharged through Bankruptcy?

Unfortunately, student loan debt is a non-dischargeable debt under the Bankruptcy Code unless you can prove that the liability is an undue hardship. However, a Chapter 13 Bankruptcy can help to restructure this liability through a more manageable repayment arrangement. Contact one of our experienced attorneys to discuss how you can obtain relief from this liability.

How do I repair my credit after bankruptcy?

A common misconception about bankruptcy is that once your debt is discharged, your credit score is tarnished permanently-this simply isn’t the case. Discharging your debt through Chapter 7 or Chapter 13 bankruptcy can present you with the unique opportunity to repair your credit score quickly. The most important thing to do after bankruptcy is to review your credit report 30 days after you have received your discharge. Even though you may not be actively rebuilding credit 30 days after your case, you can at least verify that the negative credit history is being updated. As you probably know, you are entitled to request your free credit report once per year from each of the three major credit reporting agencies: Transunion, Equifax, and Experian. Additionally, it can be strategic to pull one report every three months to ensure you are monitoring your credit completely (and maximizing your free reports). However, these agencies (and your creditors) aren’t infallible. If you pull your reports after you have received your discharge order this is your chance to review that the creditor is updating it correctly. All debt that was included in your bankruptcy should report as such. If the report does not state that the debt was included in your bankruptcy and still shows a balance is owed, you can dispute that report directly with the credit reporting company. You should include a copy of your discharge order as your evidence. If you’re currently struggling with unsecured debt or harassing calls from creditors, call Fesenmyer Cousino Weinzimmer today for a free initial consultation at 614-228-4435 (Columbus), 937-222-7472 (Dayton), or 877-654-5297 (Cincinnati), or send us a message. We will work with you to find a debt management solution that meets your needs, so you can start rebuilding your credit and get a fresh start.

I’m currently going through a divorce, should I file bankruptcy?

Divorce is one of the most commonly cited reasons for filing for bankruptcy. Although you and your spouse might be very certain you want to part ways, in some instances, it’s beneficial to delay the divorce until the bankruptcy process is complete. In rare cases, couples may be better off filing for divorce first, then filing for bankruptcy as individual debtors.

When both parties hold unsecured debt that can’t be paid back, it’s usually most beneficial to file a joint bankruptcy petition. Often times, bitterness between spouses might make this option seem unattractive, but it holds numerous benefits for both parties. A joint bankruptcy filing is a good solution for couples who hold joint debts. This can significantly reduce legal fees-the couple would only need to pay one filing fee and one attorney fee. Also note that if a divorcing couple files bankruptcy while a divorce is still in process, a stay will be put on the proceeding, causing a delay in obtaining the final decree. And if there is property to allocate as part of the divorce as well, the automatic stay will put a hold on the property division process until the bankruptcy petition is completed.

Filing for bankruptcy together, prior to divorce, can also reduce the stress and complications involved with dividing the debts between the two spouses, especially compared to the alternatives-if an already divorced couple holds joint debts, and one spouse files for Chapter 7 bankruptcy, then the other spouse will be solely liable for that debt, even though it was technically “discharged.” The liable spouse may also have to deal with the collection agencies, lawsuits, and any other issues that may arise as a result of the debt.

Filing for Chapter 13 bankruptcy jointly, prior to divorce is rarely recommended. Although a 3-5 year repayment plan is often the best option for individuals, for divorcing couples, it can lead to many conflicts of interest, as the couple’s divorce would likely finalize before the bankruptcy case completes. In some very special cases, a Chapter 13 petition can qualify for a “super discharge”-meaning that only a portion of the debt would need to be repaid, leaving the remainder of the debt discharged once the payment plan is completed. If one spouse owes the other “non-support” obligations, for example, then that debt can be discharged at the conclusion of a Chapter 13 plan. Non-support obligations include any debt to the spouse that is not child or spousal support-usually arising from the divorce agreement itself, such as a property settlement.

If you’re going through bankruptcy and a divorce at the same time, you shouldn’t have to do it alone. It’s important to have an experienced bankruptcy attorney on your side to guide you through your joint or individual petition and get the timing right-so you and your spouse can get on with your lives, emotionally and financially. If you and your spouse are considering bankruptcy, call Fesenmyer Cousino Weinzimmer today for a free consultation, 614-228-4435 (Columbus), 937-222-7472 (Dayton), or 877-654-5297 (Cincinnati).

Should I reaffirm on my mortgage after Chapter 7 Bankruptcy?

If you file for Chapter 7 bankruptcy, and you have a mortgage out on a home that you own, you’ve got a lot of decisions to make. Should you keep your home or allow it to be foreclosed on? If you decide to keep your home, should you reaffirm your mortgage per your original agreement with your lender? Or should you have that debt discharged as well?

A reaffirmation agreement is an agreement between you and your mortgage lender in which you agree to continue paying your mortgage as outlined in your original agreement. It’s important to note that a mortgage reaffirmation will legally require you to continue to pay your mortgage, regardless of whether any debt to that lender was discharged through your Chapter 7 bankruptcy agreement. Thus, if you default on your mortgage payments at any time in the future, your lender can still pursue you to recover that debt, even if you have already received a discharge through Chapter 7.

If you choose not to reaffirm your mortgage through Chapter 7 bankruptcy, the discharge will wipe out all personal liability towards your mortgage. The mortgage will remain a lien against your real estate and if you would like to keep the property, you will need to continue to make payments to the mortgage company.

Reaffirming a mortgage after bankruptcy can be a difficult decision, and there can be risks whether you choose to reaffirm the mortgage agreement or discharge it.

The risk is that if you overestimate your ability to continue paying your mortgage, your lender stands to gain a lot if you cannot pay back your mortgage. For example, say your home’s value is $150,000, and you owe that same figure on your mortgage as you file for Chapter 7 bankruptcy. Now, let’s imagine that you reaffirm your mortgage, but a year later, you can no longer afford that monthly mortgage payment-maybe you’ve had an unexpected medical expense or you get laid off.

Here, the mortgage company can legally foreclose on your home. If they foreclose and sell your home at a sheriff’s sale, which prices your home at $120,000, that leaves you with $30,000 of deficiency balance. Since you chose to reaffirm your mortgage, your lender can try to collect that $30,000. Alternatively, if you had not signed the reaffirmation agreement, then the mortgage would be discharged and you would not be liable to the lender for the balance.

Before you choose to reaffirm your mortgage after Chapter 7 bankruptcy, consider factors such as the total value of your home, your current mortgage balance, your ability to pay your monthly mortgage amount, and even your job security. Whether you are considering filing a Chapter 7 (or Chapter 13) bankruptcy petition, need advice on whether or not you should reaffirm your mortgage, or are struggling with other types of debt, Fesenmyer Cousino Weinzimmer is here to help. Call us today for a free consultation, at 614-228-4435 (Columbus), 937-222-7472 (Dayton), or 877-654-5297 (Cincinnati), or click here to send us a message.

I’m behind on my car loan, can bankruptcy help?

Whether you are struggling to make your monthly car payments, or are facing vehicle repossession, there are a variety of paths that debtors in Ohio can take to retain possession of a car that is secured by a loan. In some instances, keeping your car can be as simple as continuing to pay back your original loan-in others, you may need to negotiate a new contract with your vehicle lender.

When you file for bankruptcy, you’ll need to decide whether to surrender your car or keep it. Should you decide to keep your car, you will need to continue making payments to the lender.

If continuing to make payments on your current vehicle loan has become burdensome, or you simply no longer wish to keep your current vehicle, you may choose to surrender the vehicle and any resulting loan deficiency may be discharged in your bankruptcy.

Your Options in Chapter 7: Keeping a car that you’re still paying off can be a complex and financially challenging process. If you would like to keep your car after filing a Chapter 7, you have three options available:

  • Redemption: Personal finances permitting, you may pay your vehicle lender one lump sum payment to purchase the car at its current market value.
  • Reaffirmation: Negotiate a new contract with the lender. This typically allows you to keep your car under the same terms as your car’s initial promissory note, and in some instances your attorney may be able to negotiate a reduced loan term, interest rate, or monthly payment.
  • Retain & Pay: In more rare instances, lenders will allow debtors to keep their cars without a reaffirmation agreement by simply allowing them to continue making payments towards the original agreement.
  • Reaffirming Your Car Loan: If you are reaffirming your loan to keep your vehicle, keep in mind that the lender still has a lien on your vehicle, allowing them to repossess your car if you don’t keep up with your payments. If your lender does require a new contract for you to keep your car after Chapter 7 bankruptcy, consider this decision carefully-in the new agreement, the lender will have the right to not only repossess your car if you default on your payments, but the debt will survive the bankruptcy and you can also be held liable for any remaining balance on that loan after the vehicle is repossessed and sold at auction.

If you decide to take this route, you’ll need an experienced bankruptcy attorney to make sure you’re negotiating a fair reaffirmation agreement. While reaffirmation agreements usually mirror the original loan terms closely, your bankruptcy lawyer may be able to negotiate more favorable terms for you.

Keeping Your Car Through Chapter 13 Bankruptcy: In most cases, debtors can keep their cars by filing a Chapter 13 debt reorganization plan. Through this plan, you can keep your car as long as you pay off any remaining loan balances over the 3 to 5 year reorganization period, as outlined by the bankruptcy court.

If you are already behind on your car payments, be it on a loan or a lease, Chapter 13 bankruptcy will allow you to keep your car, bring your loan current through your repayment plan, and continue to keep current on your monthly payments.

Losing your car to repossession or resale can be an additional hardship for those already suffering significant personal debt. But with a detail-oriented bankruptcy attorney working for you, you can rest assured that you’ll not only walk away from your bankruptcy in good financial shape-you might just drive away as well.

To discuss your circumstances and get a free consultation, call Fesenmyer Cousino Weinzimmer today at 614-228-4435 (Columbus), 937-222-7472 (Dayton), or 877-654-5297 (Cincinnati), or send us a message.

My wages are being garnished, can bankruptcy help?

Individuals struggling with debt typically have to deal with collection calls and negative impacts on their credit scores, but few repercussions hit harder than wage garnishments.

If a creditor receives a judgment against you for breach of contract, it is typical that the creditor will attempt to collect on that judgment through a wage garnishment. A creditor can have the court deduct money from your paycheck to pay back what you owe. When your employer receives a notice to garnish your earnings from your pay, they must calculate the amount to withhold from your paychecks until the garnishment expires, resulting not only in loss of income you were counting on, but it can also negatively affect your credit as well.

The Chapter 7 Solution: Perhaps the simplest way to stop wage garnishments is to file for Chapter 7 bankruptcy, with the help of an experienced bankruptcy attorney. When one files for a Chapter 7 Bankruptcy, you are immediately protected from creditor collections by the Automatic Stay provision of the Bankruptcy Code. This protection will require that most creditors stop all pending garnishments to your wages.

Note that if the source of your wage garnishments is non-dischargeable, such as domestic support, child support, or alimony, the automatic stay will not protect you from creditors’ collections efforts, as these are considered priority debts, which survive a Chapter 7 discharge.

Recovering Past Garnishments: Under certain circumstances, you may actually be able to recover wages that were garnished before your bankruptcy filing. It is recommended to discuss this with an experienced attorney to determine if any of your wages can be recovered.

When Time is Of the Essence: Wage garnishments, unlike hits to your credit score, have an immediate impact on your daily finances. In some cases, stopping the garnishments may be a top priority going into your Chapter 7 filing.

When you file, you are required to list all of your creditors so they can be notified of your bankruptcy. However since the Court sends this notice out via ordinary mail, it may be necessary to notify the creditor instantly to prevent the wage garnishment. Your attorney can expedite the notice of bankruptcy to the judgment creditor, payroll department, and/or levying officer and stop the wage garnishment immediately.

At the end of your Chapter 7 Bankruptcy, the Court will issue a final discharge order. This order confirms that you are no longer personally liable for your dischargeable debt and prevents the creditors from legally collecting the debt in the future. Remember, any non-dischargeable debts will still have the legal right to collect the debt (even through wage garnishment) after bankruptcy.

If you are struggling to pay your bills and are dealing with wage garnishments on top of that, bankruptcy can be a viable solution to return to full financial strength. With the help of Fesenmyer Cousino Weinzimmer, you can start collecting your full paycheck again, discharge your debts, and start rebuilding your credit-call Fesenmyer Cousino Weinzimmer today for a free consultation, 614-228-4435 (Columbus), 937-222-7472 (Dayton), or 877-654-5297 (Cincinnati), or send us a message.

Can Bankruptcy eliminate my second mortgage or remove judgment liens?

If you have a second mortgage on your house that you can no longer afford, and your home has depreciated in value, Chapter 13 bankruptcy is a very viable option not only for reorganizing debt but for getting rid of that second-or even third-mortgage. Chapter 13 bankruptcy can help you remove the second mortgage lien on your house – a process commonly known as “avoiding a lien.”

The Lien Avoidance Process: When homeowners take out a second mortgage, it’s quite common to become “underwater” if the amount of the mortgage exceeds the market value of the house. By filing a Chapter 13 bankruptcy, you can remove that lien-the mortgage lender’s right to keep your house until your mortgage is paid off.

Through a Chapter 13 lien avoidance, the bankruptcy court will take your second mortgage-previously considered a secured debt that your lender can foreclose on-and convert it to an unsecured debt by ordering the lender to remove the lien. The bankruptcy court will only approve a lien avoidance under certain circumstances. Namely, if your first mortgage balance is less than the value of your house, you won’t be able to avoid the lien on your house. The same rationale applies if trying to avoid a third mortgage-the second and third mortgages can only be avoided if your first mortgage balance is greater than the value of your house.

If you’re currently struggling to pay off a second or third mortgage, call Fesenmyer Cousino Weinzimmer today for a free initial consultation at 614-228-4435 (Columbus), 937-222-7472 (Dayton), or 877-654-5297 (Cincinnati), or send us a message-We will work with you to find the best solution for your individual situation.

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