Filing for bankruptcy will solve many of your problems with debt and, thus, keep most of the creditors at bay. However, not all debt will be eliminated (discharged), and some creditors can still come after you once your bankruptcy protections end. A good bankruptcy attorney can make sure you know the types of debt that are and aren’t discharged in bankruptcy.
The experienced Ohio bankruptcy attorneys at Fesenmyer Cousino Weinzimmer understand that financial problems can happen to the most hard-working and well-intentioned people. With law offices in Columbus, Dayton and Cincinnati, our compassionate attorneys provide advice, assistance and a pathway to a fresh start for clients with financial difficulties in central and southwestern Ohio.
We offer a free consultation to examine your individual financial situation, your debts, your options, and your goals. Should bankruptcy be your best option, we will make sure you can stop as many of your creditors as possible. Delaying can only make things worse, so call us or contact us online today.
The Automatic Stay
Ohio bankruptcy law has an automatic stay provision which goes into effect as soon as you file. This prohibits most creditors from collection activity, such as harassing phone calls, lawsuits, garnishments, repossessions, and foreclosures. While some types of debts cannot be discharged in bankruptcy, others will be eliminated completely or restructured so that you can afford to pay them. You may be able to wind up keeping your home, your car and most, if not all, of your possessions, and you can begin to rebuild your life.
How Bankruptcy Works
The most common types of bankruptcy are Chapter 7 and Chapter 13, and creditors are handled differently in each case.
Chapter 7 bankruptcy allows you to discharge many types of debt quickly, often in a matter of months. It stops, prevents or resolves collections, loan deficiencies, repossessions, wage garnishment and civil judgments. While you might have to sell property to help pay off creditors, there are many Ohio bankruptcy exemptions, so if you do not own much property, your possessions may be all be exempt, qualifying you for a “no asset” case.
You will no longer have to pay debts that arose before your filing date, including:
- Credit card and charge account debt
- Medical and utility bills
- Collection agency accounts
- Personal loans
- Dishonored checks and civil court judgments not based on fraud
- Repossession deficiency balances
- Auto accident claims that don’t involve drunk driving
- Business and lease debts
- Older tax penalties and unpaid taxes
- Attorney fees, except child support and alimony awards
- Social security and veterans overpayments
- Student loans — if you can prove undue hardship
Chapter 13 Bankruptcy allows you to reorganize assets and consolidate your payments and repay some or all of your debt affordably over a three- to five-year period. If you complete your court-approved repayment plan, you will receive a discharge that eliminates most of your remaining debts. To file Chapter 13 bankruptcy, you must have a regular source of income and enough disposable income to meet your Chapter 13 payment plan.
Debts discharged in Chapter 13 include:
1) Nonpriority unsecured debts, including:
- Credit card debt
- Medical bills
- Personal loans
- Older nonpriority income tax obligations
- Utility bills
- Most lawsuit judgments
You will probably pay part of these debts through your Chapter 13 plan, but the remaining balances will be discharged when the plan is completed.
2) Secured Debts That Are Crammed Down or Stripped
Chapter 13 bankruptcy may allow you to remove an unsecured junior lien, such as a second mortgage, through lien stripping – having the lien classified as a nonpriority unsecured debt.
You may also be able to reduce other secured debts, such as a car loan, with a cramdown – splitting the loan into secured and unsecured portions. The secured portion must be paid, but the unsecured part is wiped out when you complete your plan.
3) Debts discharged only in Chapter 13
Debts that can be discharged in Chapter 13 but not in Chapter 7 bankruptcy include:
- Debts from willful and malicious damage to property
- Debts used to pay nondischargeable tax obligations
- Debts incurred through a property settlement agreement in divorce or separation
- Debts from a prior bankruptcy where discharge was denied
- Retirement account loans
- Homeowners association or condominium fees due after your filing date
- Certain fines and penalties owed to the government
What Bankruptcy Can’t Discharge
There are some debts that cannot be discharged. You must still repay these debts after a Chapter 7 discharge or pay them in a Chapter 13 plan.
Nondischargeable debts include:
- Back child and family support and alimony
- Debts for personal injury or death caused by driving while intoxicated
- Student loans, unless for an undue hardship
- Fines and penalties for violating the law
- Recent income tax debts (within 3 years) and all other tax debts
- Debts you forget to list in your bankruptcy papers
The following debts may be declared non-dischargeable by a bankruptcy judge in Chapter 7 if the creditor challenges discharge:
- Debts based on fraud
- Loans or cash advances or credit purchases or more for luxury goods or services made within 70 days of filing
- Debts from willful or malicious injury to another person or property
- Debts from embezzlement, larceny or breach of trust
- Debts you owe under a divorce decree or settlement unless you can’t afford to pay or the benefit outweighs the detriment to your ex-spouse
Contact Us for Help, Answers, and Peace of Mind
The bankruptcy code is filled with extremely complex procedures and rules. Making mistakes can lead to your case being dismissed by the court without a discharge and allow your creditors to continue attempting to collect. It pays to hire an experienced attorney to guide and advise you through the entire process.
The seasoned and compassionate Ohio bankruptcy lawyers at Fesenmyer Cousino Weinzimmer are dedicated to helping you through the maze of personal bankruptcy.
Our team of attorneys works hard to ensure each client’s situation is handled professionally and will advise them of their best options; then we immediately begin to implement solutions that stop creditors.
Don’t delay, call one of our conveniently located office branches or email today to set up your free consultation so we can determine what debt relief solutions will work best for you.