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Filing for Chapter 13 Bankruptcy: All You Need to Know

Financial distress can make you feel like the world is crumbling at your feet. Unbeknownst to many people, filing for bankruptcy is one of the easiest ways out since you are assured of instant property protection, and protection from further financial ruin. In as much as this action is not a financial cure, it gives you time to sit back and strategize your recovery.

 

There are two major types of bankruptcies. These are Chapter 7 and Chapter 13. The former is more traditional and the commonest since it involves the disposal and liquidation of assets so that your creditors can be paid. On the other hand, Chapter 13 involves the restructuring of debts and the formulation of a repayment plan that is usually set over a stipulated period. There are certain inherent factors that you should keep in mind when filing for bankruptcy in Ohio.

When you file for bankruptcy, you bar your creditors from collecting debts owed to them. This makes it easy for you to eradicate the obligation of paying off a majority of your debts. In addition, you can stop foreclosure of your home, thus giving you the opportunity to make payments that you had earlier missed. However, you should keep in mind that bankruptcy doesn't eliminate mortgages automatically without payment.

Unlike what most people think, Chapter 7 bankruptcy doesn't apply to everyone. Your eligibility is dependent on your level of income. In Ohio, your monthly income needs to be lower than the State's median income. You will have to pass a strict means test if your average income is higher than the state's median. Chapter 7 bankruptcy is preferred by most people since asset liquidation is easy.

The law also regulates the number of times that you can file for bankruptcy. If you are involved in a Chapter 7 scenario, you cannot be discharged if you have been discharged within the last 8 years. You will similarly not be discharged in a Chapter 13 case in case you have received a discharge from a Chapter 7 case in the past 4 years, or a Chapter 13 case in the past 2 years.

There are many rules and regulations that need to followed when filing for bankruptcy. It may be in your best interest to consult with an experience attorney to discuss your financial status and what your best option will be.

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