What Is Chapter 7 Bankruptcy?
Chapter 7 bankruptcy, also known as liquidation bankruptcy, allows individuals to eliminate most unsecured debts, such as credit card bills, medical expenses, and personal loans. This process involves selling non-exempt assets to repay creditors, followed by a court discharge of eligible debts.
During the bankruptcy process, Ohio courts issue an automatic stay, preventing creditors from contacting you, garnishing wages, or initiating foreclosure proceedings.
Do You Qualify for Chapter 7 Bankruptcy in Ohio?
Filing for Chapter 7 bankruptcy helps people get rid of overwhelming debt. However, you must meet certain requirements to qualify.
The first key factor is your income. Ohio residents must pass the means test, which compares their income to the state’s median income for their household size. If your income is below the median, you automatically qualify for Chapter 7 bankruptcy.
If your income is more than the median, the court will consider your disposable income after essential living expenses. If you have enough disposable income to pay some of your debts, you may have to file for Chapter 13 bankruptcy instead.
Finally, you can’t file for Chapter 7 if you’ve filed for bankruptcy in the past four to eight years.
How to File for Chapter 7 Bankruptcy in Ohio
Filing for Chapter 7 bankruptcy in Ohio involves several key steps:
- Gather Financial Documents: Collect records such as tax returns, pay stubs, mortgage deeds, and loan statements.
- Complete Credit Counseling: Ohio law requires you to attend a pre-bankruptcy credit counseling session.
- File a Bankruptcy Petition: Submit the required forms and documents to the appropriate Ohio bankruptcy court.
- Attend a Meeting of Creditors: A bankruptcy trustee will review your case and address any creditor objections.
- Complete a Second Counseling Course: This post-filing credit course is mandatory before debt discharge.
- Debt Discharge: Once your non-exempt assets are liquidated, remaining dischargeable debts are eliminated.
What Happens to Your Property in Chapter 7 Bankruptcy?
Clients often ask what will happen to their property after filing for Chapter 7. Generally, your bankruptcy trustee can sell certain assets to pay your creditors. The good news is that many people can retain some, most, or virtually all of their property with certain exemptions.
Ohio exemptions allow you to protect:
- Home equity (up to a certain amount)
- Motor vehicles (up to a specified value)
- Household goods and personal items
- Retirement accounts like 401(k)s or IRAs
Suppose you own high-value items or have significant assets. In that case, it’s important to work with a Chapter 7 bankruptcy lawyer to understand which assets can be protected and which may be at risk of liquidation.
In many cases, if you don’t own significant non-exempt property, you may be able to keep everything and still discharge your debts.
Ohio Chapter 7 Bankruptcy Exemptions
Ohio bankruptcy laws allow exemptions to protect certain assets from liquidation, including:
- Primary Residence: Up to $145,425 in home equity
- Vehicle: Up to $4,000 in equity
- Personal Property: Up to $625 per item, $13,400 total
- Wages: Up to 75% of unpaid earnings
- Retirement Accounts: Fully exempt, including pensions and IRAs
- Public Benefits: Disability, workers’ compensation, and child support
Married couples filing jointly can double these exemptions for shared property. Our Ohio Chapter 7 attorneys can help you maximize your exemptions.
Benefits of Filing for Chapter 7 Bankruptcy in Ohio
Filing for Chapter 7 bankruptcy in Ohio has several benefits:
- Discharge your debt – The main benefit of Chapter 7 is the ability to eliminate unsecured debt for a fresh start.
- Get relief from creditor calls – When you file for bankruptcy, you get an automatic stay. This stops creditor actions like phone calls, lawsuits, wage garnishments, and foreclosures.
- Complete the process quickly – Chapter 7 bankruptcy can be completed relatively quickly, often within three to six months. This makes it one of the fastest ways to eliminate debt.
- Avoid a repayment plan – Unlike Chapter 13 bankruptcy, you won’t be required to create a repayment plan. Once your assets are liquidated (if necessary), your remaining debts are discharged.
- Rebuild credit faster – While filing for bankruptcy will impact your credit score, you can start rebuilding your credit sooner than you might otherwise.
Chapter 7 vs. Chapter 13 Bankruptcy – Which One Is Right for You?
When considering bankruptcy, it’s important to understand the difference between Chapter 7 vs. Chapter 13 bankruptcy.
Chapter 7 bankruptcy is often faster. It’s better for people with limited income and assets who need to eliminate unsecured debt quickly.
Chapter 13 bankruptcy is designed for people who have a regular income but need help restructuring their debt. In this type of bankruptcy, you’ll pay off a portion of your debts over three to five years. You can keep your property as long as you follow the plan.
The choice between Chapter 7 and Chapter 13 typically depends on factors like your income, assets, and the type of debt you owe. A Chapter 7 bankruptcy lawyer can help you determine which option is best for your circumstances so you get the most beneficial outcome.
How an Ohio Chapter 7 Bankruptcy Lawyer Can Help
Filing for bankruptcy can be complex, but our experienced Ohio Chapter 7 attorneys can:
- Determine if Chapter 7 is right for you or explore alternatives like debt consolidation
- Assist with financial documentation and bankruptcy petition filing
- Represent you during creditor meetings and court hearings
- Help you protect exempt assets and secure the best possible outcome
Schedule a Free Consultation Today
If you’re considering Chapter 7 bankruptcy in Ohio, don’t navigate the process alone. Contact Amourgis & Associates for a free, confidential consultation today. Our offices in Akron, Cincinnati, Cleveland, Columbus, Beavercreek, and Canfield are ready to assist you.
Take the first step toward financial freedom—call now!
