What Is Chapter 7?
Chapter 7, Title 11, United States Code is known as liquidation bankruptcy. The Chapter 7 bankruptcy process involves selling all the debtor’s non-exempt assets. The sale of assets generates funds to pay off the debtor’s debts as much as possible.
Ohio courts impose a “stay” during the bankruptcy process that prohibits creditors from trying to collect on their debts. That means those creditors can’t contact the debtor about a debt. Nor can they file for foreclosure on the debtor’s home or seek to collect on a debt, repossess assets, or garnish wages and bank accounts.
Once the debtor’s estate is liquidated and used to pay off debts, the bankruptcy court will discharge any remaining debts. The creditors can no longer collect on those debts when that is done. However, some types of debts, such as student loan debt and child support obligations, cannot be discharged in bankruptcy.
How to File Bankruptcy Chapter 7 in Ohio
Filing bankruptcy Chapter 7 involves several steps. All of these steps will be easier with an Ohio Chapter 7 bankruptcy lawyer’s help.
The following are the bankruptcy Chapter 7 requirements in Ohio:
1. Document your finances. First, you must gather information about your finances. That is done by collecting these documents:
- Pay stubs from the last several months
- Income statements from the past two years if you are self-employed or run your
own business - State and federal tax returns from the past two years
- Deeds and mortgages to real estate you own
- Titles and notes for vehicles you own
- Bank statements
- Brokerage account statements
- Retirement account statements
- Annuities
- Life insurance policies you hold
- Statements or records for public benefits you receive
- Bills and invoices you have received for your debts
2. Bankruptcy Counseling. Ohio bankruptcy law requires you to attend a credit and bankruptcy counseling course before filing for bankruptcy. In addition, you must attach a certificate of completion to your bankruptcy petition.
3. Bankruptcy Petition Forms. Next, fill out the bankruptcy petition forms your local bankruptcy court provided. Each court may require specific forms unique to that court. Make sure you file in the correct court. Note: bankruptcy petitions require a filing fee unless your income is under 150 percent of the federal poverty line.
4. Second Counseling Course. After you file your bankruptcy petition, you must attend a second bankruptcy and credit counseling course.
5. Trustee Oversight. The court will appoint a bankruptcy trustee to oversee your bankruptcy. The trustee will hold at least one hearing, known as a meeting of creditors. The trustee will confirm the information in your bankruptcy petition. The trustee will also hear any objections from creditors about your bankruptcy.
6. Liquidation. Assuming you can move forward with a Chapter 7 bankruptcy, the trustee will gather and liquidate all non-exempt property you own. After the trustee resolves creditors’ objections, proceeds from the liquidation will be used to pay off your debts. Once the liquidation process is complete, the court will issue an order that discharges any remaining dischargeable debts.
Chapter 7 Bankruptcy Exemptions in Ohio
Under bankruptcy laws in Ohio, Chapter 7 allows you to be exempt from liquidating certain assets or a certain amount of value from particular assets.
In Ohio, bankruptcy Chapter 7 exemptions include:
- Up to $145,425 in equity in your primary residence
- Up to $500 of cash on hand or deposit
- Up to $4,000 of value in one motor vehicle
- Household goods worth $625 or less per item, with an aggregate value of all goods up to $13,400
- Up to $1,700 in jewelry
- Up to $25,175 of personal injury compensation received within 12 months of the bankruptcy filing
- Up to 75 percent of your wages
- Up to $2,550 of value in property that you use in your job or business
- Up to $1,325 of value in any property that you may add to another exemption or use to protect any property that is not otherwise exempt
- The interest in a burial plot
- The total value of retirement accounts, including pensions, tax-exempt accounts, and IRAs
- The total value of public benefits, such as disability assistance, earned income tax credits, workers’ compensation, or unemployment benefits.
- The total value of spousal or child support
Married couples who jointly file for bankruptcy may double these exemptions for any property owned by both of them. Check with an Ohio Chapter 7 attorney to understand your exemptions.
Chapter 7 Means Test in Ohio
Chapter 7 in Ohio uses a “means test” to determine eligibility for filing for Chapter 7 bankruptcy.
The means test has a few steps. If you meet the requirements for any step, you can file for Chapter 7.
- Income level. First, the test compares your household’s current annual or monthly income against the median income of a family of identical size in Ohio. You meet the means test if your household’s income is less than the median income.
- Expenses. If your household income exceeds the median, you can proceed to the next step, adding up your average monthly payments. These may include mortgage or rent, utilities, food, vehicle or transportation costs, health insurance, or out-of-pocket medical expenses. Once you know your monthly payments, you subtract those expenses from your household’s monthly income. This formula determines your disposable monthly income.
- If your disposable income falls below a certain threshold (updated annually), you qualify to file for Chapter 7.
- If your disposable income falls above another threshold, you are automatically disqualified from filing for Chapter 7.
- Additional calculations. Falling between these thresholds will lead to the third step, where you must perform other financial calculations. The purpose is to determine whether you can afford to pay a certain amount of your debts, usually at least 25 percent. If you can show you cannot afford to spend at least a particular portion of your debts, you will be permitted to proceed with a Chapter 7 bankruptcy.
How Can an Ohio Chapter 7 Lawyer Help
A Chapter 7 bankruptcy is often the best option for dealing with unmanageable debt and getting a fresh financial start.
An Ohio Chapter 7 bankruptcy lawyer can help you by:
- Examining alternatives to bankruptcy. A lawyer may decide another path is more suitable for your financial situation. The alternative solution might include credit and financial counseling, debt consolidation, or loan modification.
- Evaluating your eligibility for Chapter 7 bankruptcy. A lawyer can conduct a means test based on your financial information.
- Gathering and organizing your financial records.
- Drafting your bankruptcy petition and filings
- Representing you during a bankruptcy hearing. An Ohio chapter 7 bankruptcy attorney can advocate for your rights and interests when creditors object to your bankruptcy.
Are you considering a Chapter 7 bankruptcy in Ohio? Schedule a free, confidential, no-obligation initial consultation with an Ohio Chapter 7 bankruptcy lawyer from Amourgis & Associates, Attorneys at Law.
We can help you understand your rights and options for dealing with substantial debt. We’ll advise you if Chapter 7, Title 11, United States Code might be the right choice for you. Our Chapter 7 bankruptcy Ohio lawyer team stands ready to serve you and your family. Visit one of our six convenient office locations in Akron, Cincinnati, Independence (Cleveland), Columbus, Beavercreek, and Canfield.
