Do I need Bankruptcy?
Do I need a Bankruptcy attorney in Dayton Ohio? This is the question on everyone’s mind who comes here. You might, or might not, but it’s not hard for you to find out. I’ll help you. I’ve been answering the question, “Do I need bankruptcy?” as the Dayton bankruptcy attorney more people hire than any other for over 30 years.
If you need a Dayton Ohio bankruptcy attorney, you’re not alone. I’ve personally helped over 1,500 families file in just the last 2 years. Many of my clients were urged to sign up for debt management programs which would never have worked, although they were recommended by the debt management people who make a lot of money putting you into the wrong program. I can compare all options with you, because, in addition to being a board certified Dayton bankruptcy attorney, I’m also a certified debt arbitrator. Non-bankruptcy options do work well, if you have the kind of debt and income these programs demand. Not many do.
If you do need bankruptcy, then getting sidetracked by a debt management plan, debt consolidation program or other approach will do nothing but drain your finances, kill your credit, and waste your time. Sadly, too often, people in these programs end up being sued, and then come to me for the right advice, and real protection from their creditors. If they had consulted a bankruptcy attorney in Dayton Ohio first, they’d have saved a lot of time and money.
How do you know if you need to file bankruptcy? If you honestly believe you can resolve all of your current debts within 3 years, then you may not need a Dayton bankruptcy attorney. However, if you don’t honestly believe you can do this, then you probably do need to consider filing personal bankruptcy, if you are eligible.
If you are better off with a a non-bankruptcy option, I’ll know. And, I’ll tell you.
You can depend on my evaluation, because I’m a certified debt specialist, and consumer credit counselor. I’m the only bankruptcy attorney in Dayton Ohio who is a certified authority on ALL these forms of debt relief. I’ve actually helped clients with these programs myself.
And I absolutely refuse to recommend bankruptcy unless it is the best option for you.
Filing bankruptcy in Dayton Ohio is a major life event. At our law firm, we treat it as such. I know how it feels to fear going to the mailbox because there may be (another) lawsuit in it. Yes, I’ve been sued by creditors myself. I understand how you feel. That’s why more people in Dayton ask me to be their bankruptcy attorney, in part.
Fear of damage to your credit is understandable. I’ve counseled thousands of people in Dayton Ohio who, in their hearts, knew that they probably needed to file bankruptcy. But, they were so afraid of what filing bankruptcy would do to their credit, they couldn’t bring themselves to take the first step.
When I got sued, I knew my credit was shot. And when I didn’t pay the bills I owed, I was fully aware of the damage to my credit score. But, when I was finally able to start my financial recovery, I couldn’t find any program to guide me through the process of rebuilding my credit. So, I created a program myself. It works! I help my clients recovery better credit, faster than most of them think would be possible.
What Not to Do
Tragically, we see many people who come to us AFTER they have screwed up. Unfortunately, if you’re suffering financial stress, you’re “in the danger zone.” Often, people do things that, while perfectly legal and seem to make sense at the time, cause them serious problems later. Sometimes these can’t be fixed. Don’t make any changes in your finances without first reviewing Mistakes to Avoid.
First, it’s important to understand that nothing can be hidden from the Bankruptcy Court. Your right to a fresh start, and your ability to get rid of debt depends on full disclosure of everything you own, or have an interest in, even a future or possible (contingent) interest. Most of your assets are protected by exemption laws, but not everything is. That’s why a Dayton Ohio Bankruptcy Attorney is key to keeping all your property.
Full disclosure is absolutely necessary. This is not to say that you are not allowed to make changes BEFORE you file to MAXIMIZE your protections. This is called “asset planning” or “exemption planning” and we do it all the time. Ohio bankruptcy exemptions protect most of what we own. Properly done, it’s 100% totally legal. In fact, I don’t ever file a case unless I double check to see if there are any changes we need to make in order to avoid losing your property.
But, this is not something you should try to do yourself. Many, many times I’ve seen people who try to do their own legal research and end up with tragic results. There is nothing wrong with doing your own research but don’t try to become your own Dayton Ohio Bankruptcy attorney. Best to check first, BEFORE you make any changes. You may be thankful you avoided a possibly un-reversible mistake.
Mistakes to avoid are often rooted in the timing of transactions. As a bankruptcy attorney in Dayton Ohio, I see people who do perfectly legal and reasonable things that actually PREVENT them from filing personal bankruptcy. Many of these involve retirement accounts. There are two ways these avoidable bankruptcy mistakes arise.
Bankruptcy mistakes to avoid involving retirement accounts are common. I regularly see people mis-use their retirement accounts, either by taking a distribution (which almost always causes a tax problem) or by taking a loan out against their retirement funds. Then, they use the funds in a way that makes this Dayton bankruptcy attorney want to cry.
First, they pay off credit card bills. Sad. The credit cards are dischargeable in bankruptcy. And the retirement funds are protected. So, they take money that is protected to pay debt they could wipe out. This leaves the credit card company richer, and you with less to retire on.
A related mistake to avoid is using the retirement account to pay off a car. The thinking is that you will have a better budget without the car payment. This may be true, and I have actually recommended this as a strategy, but it has to be done right. As a bankruptcy attorney in Dayton Ohio, I can tell you it’s very sad to have to tell someone they did it wrong. Here’s how to do it right.
First, remember that the funds in your retirement account are protected by Ohio Exemptions. Totally protected. But the equity in your car, that is the difference between what you owe on it and what it’s worth, is only protected up to a point, about $4,000. Equity above that is not protected, and can create issues in bankruptcy.
If you pay the car off, you increase the equity by decreasing your protected retirement account. If your car was is worth $10,000, and you paid off your loan of $10,000, you now have more equity than Ohio Exemptions will protect, so you either cannot file a chapter 7 (possibly lose your car!) or will have to pay your creditors back some money in order to keep the car. Not the result you want.
But you CAN achieve your goal. Just file your bankruptcy first!, THEN, pay off the car, and eliminate the car payment. Because you had little or no equity in the car when you wiped out all your debts, the car was “safe.” Now you can eliminate the car payment safely.
There are lots of mistakes to avoid before filing bankruptcy. These are just tow of the common ones. Your best bet is to talk with a Dayton Ohio bankruptcy attorney about exemption planning BEFORE you take any action.
Don’t pay your bills
Don’t pay your bills. That’s right, don’t pay your bills. That sounds pretty strange, doesn’t it? But, if you cant afford to pay necessities like your housing and your car payment, AND your living expenses, AND pay all your bills, you have no choice but to cut something, and the bills (especially credit card and medical) have to go.
Who tells you “Don’t pay your bills?” Lots of people, even Suzi Orman and Dave Ramsey. Even the U.S. Government, in many cases, tells you not to pay your bills! (Not just your friendly Dayton Ohio bankruptcy attorney)
Really? Yes! So, its not just your friendly Dayton Ohio bankruptcy attorney.
The proof of this can actually be found in the means test. It you think it through a little you’ll see that the bankruptcy means test itself presumes that many of us should not be paying our bills.
The means test is designed to tell if you are presumed to qualify for chapter 7 bankruptcy. If your income is below the median income, you don’t even have to do the test! There is a legal presumption that you should file chapter 7. Or, to put it another way, the legal presumption is that you do not need to consider a chapter 13 payment plan. You qualify for chapter 7. In other words, don’t pay your bills.
Even in the Old Testament, every 7 years, the Lord told everyone not to pay their bills. The Lord’s release is actually part of our Christian heritage. This is not to say that obligations voluntarily taken on should be lightly ignored. Of course they shouldn’t. But the Law recognizes that there are situations, and more now than ever before, where Family Comes First. As someone who has experienced firsthand how difficult, how humbling it feels not to be able to take care of family obligations and pay bills, I know how hard it is. But you must put your needs and your family first.
So, if it makes sense, don’t pay your bills. As a bankruptcy attorney in Dayton Ohio for over thirty years, I can assure you that it the right choice to make.
Read more about why you should not pay your bills here.
The means test has always been a source of misunderstanding and mystery if you need to file bankruptcy. Even Dayton Ohio bankruptcy attorneys misunderstand the means test.
The means test was designed to reduce the number of people who are eligible to file chapter 7 bankruptcy. But, the test is fatally flawed and often doesn’t work as intended. In fact, focusing on the means test can lead you to the wrong result. As a bankruptcy attorney in Dayton Ohio, I see it every day.
Means testing is not even necessary if your income falls below the median for your family size.
This tricks many people into believing three things that are often not true.
Current Means Test in Dayton Ohio (EFFECTIVE May 1, 2020)
Family size of 1 $51,298
Family size of 2 $64,665
Family size of 3 $77,642
Family size of 4 $93,239
Three Means Test Misconceptions (Have YOU been fooled by one or more of these?)
First, if your income is under the median, the means test indicates that you should file a chapter 7, not a chapter 13.
This is totally not true. If your income is under median for your family size, this just means that you don’t need to do the means test. It does NOT mean that you should file chapter 7. Many people who have incomes under the median get much better results in a chapter 13.
Unfortunately, I regularly do “second opinion” consultations where my clients tell me that they were told to file chapter 7 “because their income was under median” and they never got an analysis or comparison of the benefits of chapter 13.
Second, if your income is over median then you cannot file a chapter 7.
This one even some bankruptcy attorneys miss! If your income is over median, all this means is that you have to do the full means test. Having income over the median does not, all by itself, mean you cannot file chapter 7. I file many clients in chapter 7 even if their income is over median. There are (legal) ways to get around the means test.
And, even if you FAIL the means test you can STILL FILE CHAPTER 7, if your circumstances support it. I do this all the time. Contrary to what you will read elsewhere, there is NO REASON TO WAIT until your 6 month average drops below median.
Yet, I continue to hear that people are advised to to this. It is totally unnecessary, yet, some bankruptcy attorneys in Dayton Ohio are reported to have told people this.
Third, if you pass the means test, you should file chapter 7.
This is so totally untrue that it should be a bar exam question. (Did you know that bankruptcy itself is NOT on the bar exam? True. You can be a bankruptcy attorney in Dayton Ohio and never have taken a single course in bankruptcy.) Just because you CAN file a chapter 7 case, does not necessarily mean you SHOULD file a chapter 7.
The means test is misleading. It should NOT, in most cases, have any effect on the decision to file, and it does not tell you which chapter to file under.
Sadly, too many people file chapter 7, because they (or their attorney) misunderstood or misapplied the means test, when they could have obtained better results, and discharged MORE debt, had they filed chapter 13.
Ch 7 vs. ch 13
You might think that chapter 7 is better than chapter 13. Many people make this mistake. After all, chapter 7 is a straight discharge of debt, and chapter 13 is a reorganization of debt, in a payment plan.
So isn’t “no payment plan” better than the “payment plan?” No. You and your Dayton Ohio bankruptcy attorney should think it through. Compare both against each other. The Ch 7 vs. Ch 13 analysis is much more involved than just focusing on payment plan vs. no payment plan.
Surprisingly, the answer is often that chapter 13 beats chapter 7!
In the Ch 7 vs Ch 13 comparison, you’ll see that chapter 7 is not actually a “liquidation bankruptcy” and the chapter 13 “repayment plan” can sometimes discharge more debt than chapter 7.
Ch 7 vs ch 13 and the myth of the liquidation bankruptcy.
You will read that “chapter 7 bankruptcy is a liquidation bankruptcy where all of the debtor’s non-exempt property is sold for the benefit of creditors.”
The truth is that almost nobody loses any property in either chapter 7 or in chapter 13 bankruptcy. Most of our property is protected, or exempt, from the trustee and creditors. Only if the bankruptcy attorney in Dayton Ohio fails to carefully examine your property and makes a mistake (and I see this happen regularly) will you lose property.
Unfortunately, once you have filed your chapter 7 case, you cannot fix this problem once the error is made. It’s too late then. This is an often overlooked benefit of ch 13 in the ch 7 vs. ch 13 analysis. The ability to voluntarily dismiss is a HUGE factor, if you might receive an inheritance, or life insurance after someone’s death.
Another popular notion in the ch 7 vs ch 13 comparison is the idea that you pay back your debt in a chapter 13, where you don’t pay back your debt in a chapter 7 bankruptcy. Like many things in law, it’s not as simple as this. Let’s take an example.
Ch 7 vs ch 13 How much debt do you pay?
In chapter 7, of course, there is no payment. At least, no payment on unsecured debts that are dischargable. This is a “zero percent plan.” But we often file chapter 13 plans that only pay 1%. Pretty close, right? Rarely will we file a chapter 13 plan that pays much unsecured debt. And when we do, it’s normally because our client has enough income to do it.
Ch 7 vs. ch 13 What about your car and house.
In both ch 7 and ch 13, the house is paid just as you normally pay it, provided you want to keep it. In a ch 7, unlike ch 13, you need to be current on your payments, because if you aren’t you will still face a foreclosure later. In ch 13, however, you can “catch up” missed payments and keep the house, and stop foreclosure.
But there is another HUGE factor in the ch 7 vs. ch 13 comparison if you have a second mortgage or HELOC (home equity line of credit) on your home. Sometimes you are able to “strip down” a mortgage in Ch 13, treating it like a credit card, often at the 1% payment level. This means you can eliminate some mortgages on your home in ch 13. You cannot do this with a chapter 7.
Lien stripping in Ch 7 vs. ch 13. Lien stripping can be done in both chapter 7 and chapter 13. As s bankruptcy attorney in Dayton Ohio, I regularly see judgments out of the Dayton Municipal Court, or Kettering Municipal Court, and others, filed against the homes of my clients. Now that the Ohio exemption laws have been improved, I can almost always remove, or strip, these liens from my client’s homes.
This applies to judgment liens, the kind you get when you are sued by a credit card or other commercial creditor. This process does not work, either in Chapter 7 or in Chapter 13, for statutory liens, like tax liens. But, in a Chapter 13, you are able to pay these liens off, and at the end of your case, they are gone!
Car payments in ch 7 are not affected by the bankruptcy if you decide to reaffirm your car debt. You keep the car, and the terms are unchanged. If you have an upside down car in ch 7 and want to keep it, you will still pay the same high interest rate and you will still have to pay more for the car than it is worth, if you decide to keep it.
Car payments in ch 13 work differently. If your car is “upside down” and you owe more on it than it’s worth, you may be able to only pay the value of the car. And, ch 13 lets you change the interest rate to about 6%, which could save you thousands of dollars.
Whether or not you can “cram down” the debt on a car depends on how long before you file your chapter 13 case. If you purchased the car more than 910 days before filing, then you can “cram down” the debt in your chapter 13. A good bankruptcy attorney in Dayton Ohio will be careful to factor this into the ch 7 vs ch 13 analysis.
So, in the ch 7 vs ch 13 comparison, it’s clear that there is no clear winner, and if you need bankruptcy, then you need the right Dayton Ohio bankruptcy attorney to help you do the ch 7 vs ch 13 analysis to know if you can actually pay less, and discharge more, in chapter 13 vs chapter 7.
Debt Payment Calculators
See how the different options compare to each other. Find out how low your chapter 13 plan payment could be. These interactive calculators will give you an idea of how much you will likely pay each month in a debt management plan, vs different chapter 13 repayment levels.
Chapter 13 repayment plans are generally less expensive than debt management plans. In nearly every situation I evaluate, the payments are MUCH LESS in chapter 13. And, chapter 13 repayment plans can pay as little as 1% – almost nothing.
Chapter 13 repayment plans have one other very important feature. Creditors are REQUIRED to participate. Unlike a debt management plan, creditors HAVE NO CHOICE but to take what they get, and what you don’t pay is discharged. And, unlike debt management plans, there is NO TAX CONSEQUENCE on the debt that is discharged. In debt management plans, you are taxed on what you don’t pay.
I’m a certified debt arbitrator as well as a board certified Dayton Ohio Bankruptcy attorney, and I always make sure that we compare the different plans so you can be confident you have done your “due diligence” and carefully compared the pros and cons of each debt relief option. That way, you KNOW you have the right solution.Chapter 13 Calculator Debt Repayment vs Chapter 13 Calculator
Credit Card Bankruptcy
Credit card bankruptcy is the number one kind of bankruptcy that I see filed in Dayton Ohio. As a bankruptcy attorney in Dayton Ohio, I file more credit card bankruptcy than any other kind.
Of course, there is no such thing as “credit card bankruptcy” as a separate legal kind of bankruptcy. This term just describes the main reason that many people file. Often clients ask me if they can just file bankruptcy on credit cards and not on any other kind of debt. Sometimes we can! All debt has to be listed, but if all you owe is credit card debt, then that’s all you have to list.
Credit card bankruptcy is the most commonly filed bankruptcy because it is the most needed kind of bankruptcy. As a Dayton Ohio bankruptcy attorney for more than 33 years, I can state with certainty that credit cards are responsible for more bankruptcy cases than any other single kind of debt.
Credit card bankruptcy is the key to retirement if you are at or near retirement age. It can be caused by having to rely on credit cards to cover living expenses during a period of illness or unemployment. Credit card companies are making a fortune! Charging interest rates of 29.99, or higher. The amount of credit card debt that is discharged in bankruptcy is nothing compared to the profits they make.
If you are old enough, you will remember that credit card companies used to actually warn you when you approached your credit card limit. Now, it’s just the opposite.
When the banks see you near your limit, the will often send you “Congratulations” and actually INCREASE your limit, and include some “convenience checks” so you’ll be sure to have them available to put yourself deeper in debt. They don’t want you to EVER be debtfree.
Credit card bankruptcy is very often the best approach in situations where you would be able to pay your normal monthly payments on your house and car, and keep up with your other obligations, if only you didn’t have the credit card debt.
If this describes you, then a credit card bankruptcy might be the best option. Your creditors generally cannot make you give back any of the things you bought, as they are almost always exempt, and protected.
You keep what you charged on the credit cards when you file bankruptcy on the cards. In almost every case I see, the items you purchased on credit cards are not at risk when you discharge the credit card debt. The creditors have no right to demand that you return what you bought.
This is because credit cards are “unsecured” debts. Unlike a car, for example, where the creditor retains a “security interest” in the car, items you purchase on credit cards are yours to keep when you file bankruptcy.
The only situation I see that could cause you some problems would be where you purchase “luxury goods or services” within the 90 days before you file your case. You can look this up at 11 USC 523, but, in practice, I have yet to see a creditor object to anyone’s case based on this reason.
Having been a bankruptcy attorney in Dayton Ohio since 1986, I’ve seen a lot of credit card debt discharged, and the powerful, positive effect it has on the lives of my clients. Just take a look at your credit card statement. Check out the chart that tells you how many years you’ll be in debt if you just make the minimum payments. And how much you’ll pay. It’s depressing. But, we have a solution in bankruptcy.
How many times have you paid for the things you have charged on your credit cards? If you compare the purchase price of what you bought and how much you have paid over the years, you’ll feel much better about considering a credit card bankruptcy.
The Cost to File Bankruptcy
The cost to file bankruptcy is, of course, an important consideration. Many people think, “We’ll, if I can’t pay my bills, I sure can’t afford a good bankruptcy attorney in Dayton Ohio.” So, they get a “cheap bankruptcy attorney” or “affordable bankruptcy attorney” (code-word for cheap) or “low cost bankruptcy attorney.” And suffer the consequences.
Focusing on the cost to file bankruptcy is NOT the way to chose a Dayton Ohio bankruptcy attorney. There’s a lot of wisdom in that old saying, “you get what you pay for.” I cannot even begin to tell you all the horrible messes that clients have brought to me created by bad legal advice, given to them by some affordable bankruptcy attorney who turned out to be not even worth the cut-rate he charged.
To find the true cost to file bankruptcy, you need to have a wider view. And, you need to think about it a little more deeply than the “affordable bankruptcy attorney” websites want you to.
Most people will only file one bankruptcy in their entire lives. You need to get this right. The true cost to file bankruptcy is really high if you get it wrong. But the cost to file bankruptcy is still pretty high even if the “affordable” Dayton Ohio bankruptcy attorney doesn’t screw it up, and you eventually get your discharge.
Why? Because that’s all you’re going to get.
High quality legal service is not cheap. But it turns out that it’s cheaper than getting only a partial financial recovery. That’s why, when looking for the right bankruptcy attorney in Dayton Ohio, you need to consider what you need first, and the cost later in the analysis.
What you need, is a financial recovery. The dictionary defines recovery as a “return to a normal state.” In a financial context, this means more than just getting your debts under control, although that is certainly an important first step.
To fully return to a normal financial state, you also must have been able to recover normal, preferably good, credit. Bankruptcy alone won’t do this for you. You need more. You need a proven program that is specifically designed to work for someone who has discharged debt in bankruptcy, because your needs are different, and the time to recover your credit can be shortened if you know exactly how to go about it. There are some important nuances that make your credit recovery faster, and better, which is exactly what you need.
And, what about the cost of not getting help with your credit after bankruptcy?
This can cost you tens of thousands of dollars, or more.
The sad thing is that people who don’t understand this never relate it to making the choice to settle for an “affordable bankruptcy attorney in Dayton Ohio” and the fact that they never got any help to rebuild their credit.
They don’t stop to think that their financial recovery is not really part of filing a bankruptcy case. Bankruptcy done, and they stopped there, thinking, perhaps, that somehow, all by itself, their credit score would magically start to improve.
They just didn’t understand that credit recovery was an additional process, beyond the filing of the bankruptcy, and that the low-cost Dayton Ohio Bankruptcy attorney was “just doing his job” and nothing more. Nobody told them “the rest of the story.” .
But now you know the rest of the story. A full financial recovery is more than just a bankruptcy discharge. To get the result you need requires more work, and that costs a little more.
The $500 bankruptcy Attorney and Zero Dollar Down Trap.
Cheap bankruptcy attorneys, aka “affordable bankruptcy attorneys” are everywhere. And a number of people, especially when money is tight, get lured into thinking that “cheaper is better.” And who can resist “no money down” whether you’re buying a refrigerator or a car?
Let the buyer beware.
Think about this for a minute.
If your financial future means anything to you (and, of course, few things are more important) does it makes sense to go for the bottom of the barrel?
What bankruptcy attorney in Dayton Ohio is going to to a top quality job for bottom of the barrel prices? The truth is, it just can’t be done cheap, if you are going to do it right.
There’s a lot of effort and time involved in doing this complex legal work well, so it only stands to reason that you’ll pay more to get it done properly.
If an attorney is promoting low prices, what does that tell you?
Is this how you would select a surgeon if you needed a heart operation?
Is your financial future worth gambling on cut-rate legal counsel?
There is a superficial, and dangerous, attraction to paying the lowest price you can find for something. This works for lots of things, like cars and cabbage, things that don’t impact the rest of your life.
But, for surgery, you want a specialist. If it matters greatly, you consider price last, not first, and sometimes not at all.
You get what you pay for. And, I’ve yet to see any cut-rate attorney reviews on the internet sharing their great credit recovery after bankruptcy (we, however, have hundreds of them).
Sometimes, bigger IS better!
In our office we have a staff of 4 attorneys, a post-petition (after filing) paralegal department of 4 paralegals, a processing and data entry department of 4 paralegals, and a front office staff of 3 legal assistants to handle your calls, take messages, schedule your hearings, etc. Bigger IS better, sometimes.
When someone is on vacation, or get sick, we don’t miss a beat. Everyone is backed up, trained and ready to go. Our clients are secure in the knowledge that if someone is out sick, they still get answers and high quality service.
When your financial recovery is on the line, you want to be confident that you’re law firm is solid, and has a proven track record of over thirty years of excellent service, evidenced by hundreds of 5 star reviews from its clients.
And, we have payment plans.
We get your case filed by diverting money from your creditors to help you pay for a full financial recovery. We didn’t get to be the number one bankruptcy attorneys in Dayton Ohio without helping our clients discover how to pay for the high quality results they need.
You owe it to yourself and your family to think the “cost to file bankruptcy” question through thoroughly. I think you’ll conclude that the cost to get the job done right, and getting the extra help you need to recovery your credit is not really a “cost” but is an investment in your future.