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Ohio Bankruptcy Law Blog

Getting a new mortgage after filing bankruptcy

Perhaps one of the biggest concerns among homeowners in Ohio who are considering bankruptcy as the solution to their debt problems is how such a decision might impact their future. Specifically, people often worry that they will not be able to buy a home or get a new home loan ever again with such a mark on their credit histories. This is not actually the case. Home ownership after bankruptcy is indeed possible.

As explained by My Horizon, a lot of what may help someone realize the dream of buying a house again after a bankruptcy may be influenced by what type of credit they have rebuilt. The odd thing with credit is that the only way to have a good credit score is to get credit and use it but that use must be judicious. That means consumers should take care to not only acquire new credit even if in the form of a secured credit card but to use it carefully and pay it off every month. Late payments should be avoided at all cost. Eventually, a credit score will increase.

Bankruptcy topics: Is your debt secured or unsecured?

Your financial situation may have reached a level where you can no longer keep your head above water. You began looking for debt relief alternatives, and you believe that bankruptcy may be a viable option for you. When you explore the possibility further, you begin to see discussions about how the process handles your debt depending on whether it's secured or unsecured.

Understanding the difference in your debts could affect what chapter of bankruptcy you file. The information below discusses the differences between the two types of debt.

Sale of seafood company stopped by creditors

Most in Cleveland likely view bankruptcy as a choice made by those looking to avoid further action being taken against them by their creditors. Yet in some cases, it may be the other way around. A person or company’s creditors may find it to be in their best interest to force a debtor into bankruptcy in order to recover a portion of their claims. While many view such a move as being drastic, some parties may view it as the only way to avoid losses associated with a liability claim.

Such action was recently initiated by the creditors of a seafood company after certain aspects of the company’s proposed sales began to raise eyebrows. The assignee in the case had initiated preference litigation against certain creditors, which caused the others to then step up and halt the sale of the company by pressing it into an involuntary Chapter 7 bankruptcy.

What should I know about debt collection?

If you are faced with significant debt in Cleveland, creditor harassment is bound to be a real issue for you. To this end, it’s important that you are aware of the ways creditors are permitted to contact you, as well as the methods that are not permissible by law. That way you can easily recognize creditor harassment and subsequently deal with it in the appropriate manner.

According to the Federal Trade Commission, you should engage the creditor contacting you initially, even if it’s only to make clear that you are currently unable to repay debt. However, if you wish for the creditor to cease contacting you, you are fully within in your right to do so. This requires drafting a letter stating your desire for communication to stop, sending a certified letter and paying for a read receipt so you know that the creditor received your correspondence. Once you do this, the creditor can only contact you to inform you that no other action will take place, or that they are pursuing a lawsuit.

Common bankruptcy myths

Many people in Ohio think that bankruptcy is the answer to all of their financial problems when they find themselves facing an insurmountable amount of debt. They may be genuinely struggling to pay their bills and household expenses. But not being properly informed about bankruptcy can result in them not getting the debt relief they seek and lead to complications. 

Here are some common myths about bankruptcy. 

What if you cannot make your Chapter 13 payments?

For many of those in Cleveland that may be struggling with debt, the option of seeking bankruptcy protection may seem to be out of the question due to a desire to be able to repay their creditors on their own. If this describes your attitude, you should know that a Chapter 13 personal bankruptcy allows you to do this. You present a payment plan to the court which allows you to repay your debts while stopping creditors from taking further actions against you. Countless others in your position have turned to this particular form of debt relief. In fact, data shared by Fox Business shows that nearly 30 percent of the 1.175 million bankruptcy filings in 2012 were Chapter 13 cases.

Yet what happens if you are unable to make your Chapter 13 payments? If financial hardships (such as the loss of a job or a reduction in income) contribute to your inability to pay, you may be able to explain your situation to the court and ask for more time to resolve the situation. If a resolution is nowhere in sight, you may even ask for hardship discharge, which discharges your case despite not having completed your payment plan.

Payday loan traps use your anxiety as bait

To say that payday loans are a trap may be an understatement, in the opinion of many financial counselors. The payday loan industry entices borrowers who are desperate or don't have the time or resources to investigate other ways to solve their financial crises. Perhaps you were in that situation when you took out your payday loan.

These short-term lenders offer you small loans, usually less than $500, for a short amount of time, typically two weeks. You often get the money you need within minutes. While it sounded easy, the terms and consequences of default may not have been clear to you.

Explaining the Homestead Exemption

Debt struggles can strike almost anyone in Cleveland. If and when they affect you and your family to the point of having to consider a Chapter 7 bankruptcy, you will likely ask yourself the same question that many have brought to us here at Rauser and Associates Legal Clinic LLP: Can I keep my home? The answer to that question depends on a few different factors, yet there is hope that you will not have to lose what is likely your most valuable asset.

Federal and state bankruptcy laws allow you to exempt the interest that you hold in a number of different personal assets and properties in a Chapter 7 case. Exemption amounts are established at both the federal and state levels. Many states give you the option to decide which to apply to your case. Ohio, unfortunately, does not. The state has opted out of federal exemptions, meaning you must follow its own guidelines.

What situations do Chapter 7 bankruptcy suit?

As a resident in Ohio who is currently struggling with debt, you are likely looking over your possible bankruptcy options. There are two primary options available: Chapter 13 and Chapter 7. Depending on your unique situation, one will likely benefit you more than the other.

Chapter 7 bankruptcy, according to the United States Courts, essentially allows you to liquidate valuable assets in exchange for relief from a majority of the debts you are carrying. Some types like student loans are not lifted, but others like medical debt or credit card debt can be absolved through this method. Some property may be exempt from liquidation like items of sentimental value. However, high value items like jewelry and cars are usually among what's liquidated.

Beginning bankruptcy: Do you know how to petition the court?

After deciding to take the leap and move forward with bankruptcy to address your overwhelming debt, you may feel a sense of empowerment due to having a solid direction in which you would like to move. Of course, the bankruptcy process involves several steps, and that sense of empowerment may quickly turn to confusion if you do not know how to begin your process. Luckily, many of the steps have a relative simplicity.

In order to begin your bankruptcy case, you must request that the court hear your case. This part of the proceedings falls under petitioning the court. Once you file a petition and the court grants your request, your legal proceedings can move forward.

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