A Comprehensive, Complete, and Clear Chapter 13 Bankruptcy Guide
By Cincinnati Bankruptcy Lawyer, Credit Counselor, and Debt Counselor Richard West
If you have been searching for a comprehensive, complete, and clear chapter 13 bankruptcy guide you don’t have to look any further. I have been a bankruptcy lawyer in Cincinnati for more than 3 decades and have filed many thousands of bankruptcy cases under chapter 13 of the bankruptcy code in my career.
In addition I am a certified credit counselor and I have helped the clients in these cases in cleaning up their credit reports and rebuilding their credit fairly quickly after their bankruptcy. Rebuilding credit after your bankruptcy is critical so that you achieve a complete financial recovery. Bankruptcy is just the first step towards a full recovery program.
If you want answers about bankruptcy in Cincinnati, Ohio, or you are looking for information that is clear and doesn’t involve double talk or a lot of technical legal jargon, then you will find this guide extremely helpful. You will find practical advice, tips most other bankruptcy lawyers in Cincinnati, Ohio won’t tell you, and answers to your questions in plain English.
As a Cincinnati bankruptcy attorney I created this chapter 13 bankruptcy guide to help you understand what a chapter 13 bankruptcy will, and will not, do and whether it is the best tool for your financial problems and debts so that you get the financial reorganization that you deserve.
Is chapter 13 bankruptcy the right decision in your situation?
The first thing that you have to do in order to determine whether a chapter 13 bankruptcy is right for you is to look at your bigger financial picture. Ignore the means test details for chapter 7 bankruptcy, don’t worry about income charts or bankruptcy exemption amounts, and all of the other details that you read about while searching the internet.
The means test is used for chapter 13 bankruptcy cases but not in the way you may think while you research this topic online. There are different forms for the means test than those used with chapter 7 bankruptcy cases, and in a lot of ways the results of this test do not matter when you are filing a chapter 13 bankruptcy test.
A chapter 13 bankruptcy case is usually chosen either because you do not qualify under chapter 7 of the bankruptcy code or because this type of bankruptcy allows you to achieve things that are not possible in a chapter 7 bankruptcy proceeding. With all of the factors involved being equal I recommend chapter 7 over chapter 13 as a bankruptcy lawyer in Cincinnati as long as the client qualifies. While a chapter 7 bankruptcy case may involve higher costs up front in Cincinnati bankruptcy attorney fees this option is also quicker, not as complicated, and will allow a client to rebuild their credit sooner because their debts are discharged faster than in a chapter 13 bankruptcy.
There is one critical question that needs to be discussed before it is possible to determine whether a chapter 13 bankruptcy is right for you, or even if you qualify for a chapter 7 bankruptcy. With your current income is it possible to cover your needs and the needs of your family, paying for necessities like food, housing, transportation, and other basic needs, and still pay off all your debt in a reasonable amount of time? A reasonable amount of time is considered to be 3-5 years.
If you determine that cutting back on your spending and following a carefully planned budget would allow you to answer yes to this question then bankruptcy may not be the best choice unless you are in foreclosure or there is another important issue that will not hold off for a reasonable period of time.
If you can honestly answer no to the question above after looking at the big financial picture then a bankruptcy, whether this is a chapter 13 bankruptcy or a chapter 7 bankruptcy, should be carefully considered and a bankruptcy lawyer in Cincinnati should be consulted.
Who is a typical chapter 13 bankruptcy filer?
There is no typical chapter 13 bankruptcy filer, this individual or couple could be anyone. As a bankruptcy attorney in Cincinnati I have filed chapter 13 bankruptcy cases for clients who earned more than $100,000 each year, and clients who tried to survive with just $1,500 a month from social security.
People who I represent as a Cincinnati bankruptcy lawyer are single, married, younger, older, parents, those without kids, renters, homeowners, etc…. These people fall across the entire spectrum of income and expenses. There is actually not much difference between those who file for chapter 13 bankruptcy and those who file for chapter 7 bankruptcy. We all face issues, and we all have similar expenses. Auto loans, mortgage or rent payments, utilities, insurance, and other basic necessities.
As a bankruptcy lawyer in Cincinnati I have found that the reason people file for chapter 13 is because this option allows them to achieve goals that could not be accomplished in a chapter 7 bankruptcy case. With a chapter 7 filing you could not replace a vehicle that is old or ready to break down, and you could not keep property that you owe a debt on for less than the full debt amount. Chapter 13 will usually allow you to do these things.
Another reason that my clients use a chapter 13 bankruptcy is that they pay something on the debts that they owe, and their repayment is based on what their current income level can afford. This offers a sense of satisfaction because you are trying to be responsible and pay what you can while still getting a handle on your finances.
More people should file for chapter 13 bankruptcy but they just don’t realize it.
People who file for chapter 13 bankruptcy protection could be anyone. They could be your parent, your sister or brother, your friends, your boss or co-workers. As a bankruptcy lawyer in Cincinnati I have had clients who have filed for chapter 13 bankruptcy who were bank presidents, lawyers, blue collar workers, and even those who are retired. Once I represented a judge in this type of case, and many of my clients who use this type of bankruptcy have been doctors. No one gets immunity from financial difficulties, and my clients come from all professions, income levels, and backgrounds.
A common misconception is that a chapter 7 bankruptcy is somehow better than a chapter 13 bankruptcy. In my career as a Cincinnati bankruptcy attorney I have had a number of clients who seemed disappointed because they were hoping to file for chapter 7 bankruptcy and we determined that a chapter 13 bankruptcy filing would give them better results.
Many of the potential clients who are searching for a bankruptcy lawyer in Cincinnati ask me if a chapter 7 bankruptcy is better than a chapter 13 bankruptcy, but this question is not a simple one. Neither type of bankruptcy is better than the other, it is simply a matter of which one fits your unique situation, circumstances, needs, and finances better and will give you the best possible outcome.
Some people may be better off filing for chapter 7 bankruptcy, but there are times when it is impossible for you to use this chapter to get the debt relief and fresh financial start that you are hoping for. Anyone who has filed for bankruptcy protection in the previous 8 years will not be allowed to file for chapter 7 bankruptcy, even if they meet all of the other requirements.
If you have property that is worth far more than what a chapter 7 bankruptcy case can protect with the allowed exemptions then a chapter 13 bankruptcy may be best. If you have a vehicle that is paid for and that is valued at much more than $5,000 then as your bankruptcy lawyer in Cincinnati I would advise you to use chapter 13 bankruptcy.
As a Cincinnati bankruptcy attorney I have found that even people who qualify for a chapter 7 bankruptcy could be better off in a number of ways by using chapter 13 bankruptcy instead. The sad truth is that a lot of bankruptcy lawyers in Cincinnati are not comfortable handling a chapter 13 bankruptcy case because it is much more complex and can be a lot more complicated. These lawyers will recommend a chapter 7 filing even if a chapter 13 bankruptcy would give their client a better outcome.
This is not the only reason why a lot of bankruptcy lawyers in Cincinnati and other areas prefer not to file a chapter 13 bankruptcy case for their clients. This type of bankruptcy requires a significant commitment by the Cincinnati bankruptcy lawyer because the case can require 3-5 years of support and monitoring, something that few bankruptcy lawyers have the time, staff, and other resources to offer to their clients. Some may not want to partner with clients for this extended length of time in order to help the clients realize a complete financial reorganization and recovery.
I have had a number of bankruptcy attorneys tell me in private that their goal is the money, and putting a client into a faster chapter 7 bankruptcy case is more lucrative and takes less time and effort on their part than a chapter 13 bankruptcy case that takes longer and requires more work.
I feel the exact opposite because I believe in doing what is best for the client, and I want you to gain the best outcome possible as a bankruptcy attorney in Cincinnati. If we decide that a chapter 13 bankruptcy is in your best interests then I will partner with you for the time required to achieve this, and even work with you after the bankruptcy case is finished so that you can recover your credit and get a true fresh financial start.
Who qualifies for a chapter 13 bankruptcy case?
You can search the world wide web looking for information on chapter 13 bankruptcy and trying to determine whether you qualify for this type of debt relief, but usually all you will find is information that can be extremely confusing or even misleading at times.
Typically the first thing you will learn in a chapter 13 bankruptcy search is that there is something called a means test. I have created a number of videos that explain what the means test is, how this test works, what happens if you fail this test, and why the means test is not as important as you may believe. These videos can be found on my website and also on YouTube.
As a bankruptcy lawyer in Cincinnati my advice is not to worry or waste a lot of time studying up and researching the means test because this test functions differently in a chapter 13 bankruptcy case than it does in a chapter 7 bankruptcy case. In the end this test is often irrelevant when it comes to chapter 13 bankruptcy. There is no pass or fail with the test in a chapter 13 bankruptcy filing the way there is with a chapter 7 bankruptcy filing. This test is instead used to indicate how much unsecured creditors, such as medical bills and credit card debts, should be paid back. In many cases the means test outcome is flat out wrong and we are often not even required to follow these results.
You need a qualified bankruptcy lawyer in Cincinnati in order to get the best possible outcome if you have excess property equity and you want to keep the property by filing Chapter 13 bankruptcy. Simply reading about chapter 13 bankruptcy won’t tell you how to get the desired results. I have filed thousands of these cases in over 30 years of practice as a Cincinnati bankruptcy lawyer and understand what you can do and how far you can go so that the best results are achieved. Every case and situation is different.
Your income, or your household income to be more specific, is closely linked to the means test. All sources of income that your household has must be reported and considered. If you have income that is sufficient to pay all of your necessary expenses and still pay some or all of your debts then you will probably not qualify to file a chapter 7 bankruptcy petition, a chapter 13 bankruptcy filing may be your only option.
Even passing the means test does not mean that you can automatically qualify to use a chapter 7 bankruptcy petition. This is just one of the several tests that will be applied. In some cases the means test is not even required yet the court will find that your income is sufficient to pay at least part of the debts that you owe. This finding alone will disqualify you from filing for chapter 7 bankruptcy, but chapter 13 bankruptcy is still possible.
As a Cincinnati bankruptcy lawyer I explain that there is a bright side for potential clients who can not pass the means test or qualify for a chapter 7 bankruptcy filing. I can usually find a way for these clients to file for chapter 13 bankruptcy and pay little or nothing to unsecured creditors who hold credit card and medical bill debt.
Things to avoid before you file for chapter 13 bankruptcy!
As a bankruptcy lawyer in Cincinnati there are some things that I advise clients to avoid for a minimum of 6 months if they are even considering a chapter 13 bankruptcy filing. These include:
• Large financial transactions can complicate a bankruptcy case. Consult with a qualified Cincinnati bankruptcy attorney before any significant transactions are undertaken.
• Never liquidate any retirement plans that you have.
• Avoid transferring property out of yoru name and into someone else’s name. This may be viewed as an attempt to hide property and can result in criminal bankruptcy fraud charges.
• Only pay the usual monthly amount to your creditors, do not pay extra.
• Never purchase property until you have consulted with an experienced bankruptcy attorney in Cincinnati.
It is normally a good idea to refrain from purchasing property before filing for bankruptcy but there are certain exceptions. There are cases that I have handled as a bankruptcy lawyer in Cincinnati where I have had clients buy a vehicle before they file for bankruptcy for practical reasons. It may be easier for the client to get credit and qualify for a vehicle loan before they file a chapter 13 bankruptcy case than it would be once the bankruptcy petition is filed.
Once we determine that a chapter 13 bankruptcy case is right for your circumstances we will spend a significant amount of time talking about vehicles. My goal is to help you get the best possible results and that means looking at the big picture, not only the income that you have, the debts that you owe, and the bills that you pay.
My reputation as a bankruptcy attorney in Cincinnati means that many people come to me for a second opinion consultation. These individuals have consulted with a Cincinnati bankruptcy lawyer and were convinced that the first lawyer was not the right professional to handle their case. Far too often these people disclose to me that the first bankrupt lawyer simply plugged their specific numbers into a set and rigid formula, and then calculated a chapter 13 bankruptcy payment plan. This approach is the simplest method that can be used but also very dangerous, and it could impact the outcome of your case.
I am looking out for your future and will help you achieve the best financial recovery possible. If I determine that your vehicle is older and frequently in need of repair, or I see that you received a terrible deal with an overpriced automobile and an upside down loan, then we will discuss possibly making certain changes before we actually file the chapter 13 bankruptcy petition.
A 3-5 year plan is used for chapter 13 bankruptcy, and I want to ensure that you will have a dependable means of transportation for this entire period and even longer. Looking at your various options in the beginning for vehicle replacement before a chapter 13 bankruptcy case is started can greatly improve the outcome of your case, and failing to do this could mean a plan that fails before the bankruptcy case is even finished. I evaluate the big picture so that my clients are successful after their chapter 13 bankruptcy, something that many bankruptcy lawyers in Cincinnati do not do.
Because of my decades of experience as a bankruptcy attorney in Cincinnati, Ohio I even know which local businesses can help my clients get the vehicle that they need before they file for chapter 13 bankruptcy. My clients benefit from my extended experience. I have a more detailed and complete list of the things that you should avoid before you file for bankruptcy on my website.
Which debts can be discharged with a chapter 13 bankruptcy?
Many different debt types can be discharged with a chapter 13 bankruptcy case. This can include:
• Credit card debts
• Personal loans
• Medical debts
• Title loans
• Collateral loans
• Payday loans
Credit card debts and personal loans
Debts for credit cards and personal loans are some of the most common debts that are discharged through chapter 13 bankruptcy. Both of these debt types are unsecured debts, and as such they are typically discharged successfully at the end of your chapter 13 bankruptcy case. These specific accounts may be closed by the creditor but after your bankruptcy case has been discharged obtaining a new credit card is usually not an issue.
I offer a video that explains how medical bills can be discharged through chapter 13 bankruptcy here. Medical bills are one of the biggest reasons that people file for protection under the bankruptcy laws. One frequent question that I am asked as a bankruptcy lawyer in Cincinnati is whether my client can still get the medical care that they need if medical debts are discharged, and the answer is usually yes.
Under a chapter 13 bankruptcy you may pay some of the bills before the debts are discharged, but many of my clients pay little or even nothing and still have laboratory fees and hospital bills discharged at the end of their bankruptcy case. The debts need to be listed by your bankruptcy lawyer in Cincinnati, if they are not listed in the petition then they will not be discharged when the bankruptcy case is finished.
I have never had a client tell me that their chapter 13 bankruptcy prevented them from getting treatment, even from organizations who have had a debt discharged during the chapter 13 bankruptcy case. Emergency rooms and ER staff wills till provide necessary medical care, and usually can not even tell that you have had a bankruptcy case in the past.
One exception is private physicians. When this type of debt is discharged during chapter 13 bankruptcy then the doctor may refuse to keep you as a patient and they are not legally obligated to do so, but in my experience they will in many cases as long as you discuss the situation with them beforehand. Every situation is different. Sometimes a debt to a private physician is discharged during a chapter 13 bankruptcy case and the doctor will no longer see you.
Because of my experience as a bankruptcy lawyer in Cincinnati I advise my clients to discuss this situation with their physician before their chapter 13 bankruptcy petition is filed, and make arrangements to pay the debt voluntarily in order to continue seeing the doctor once their bankruptcy case is filed. Once the debt is discharged you do not have to pay it but you can do so on your own if you choose to. It is not possible to leave out the physician debt in the chapter 13 bankruptcy petition, we must list ALL of the debts that you owe.
Title loans are completely legal and are allowed by state law in Ohio. These loans typically charge excessive interest rates, and consumers who owe this type of debt end up paying more than they can afford because they need to keep their vehicle. It is a fact that title loan companies are quick to repossess the vehicle used as collateral if even a single payment is missed. This type of debt can be very frustrating for a bankruptcy lawyer in Cincinnati, Ohio, and dangerous as well for the consumers who owe them.
Without a vehicle life can be close to impossible. The debt that is owed to the title loan lender can be discharged with chapter 13 bankruptcy, but you could lose the car to the lender when this is done because the loan involves a security interest in the vehicle. Unlike a chapter 7 bankruptcy case where I advise a client to try and pay off this type of loan before the bankruptcy is filed this is not necessary during a chapter 13 bankruptcy. Instead we can take from 3-5 years to pay off any title loan, normally with an interest rate that is capped at 4.75%.
In my experience as a bankruptcy lawyer in Cincinnati lenders who offer title loans are some smart cookies. The amount loaned is typically not more than what the vehicle is worth. If you managed to get a loan that is more than what the car is valued at a chapter 13 bankruptcy case can allow you to cram the loan down similar to what can be achieved with a collateral loan. One of the most effective tools against title loans is a chapter 13 bankruptcy filing.
These are loans backed by collateral, from companies that have names like Beneficial, Household Finance, Springleaf, American General, and One Main Financial. These lenders normally involve a very high interest rate, and when you apply you must fill out a form listing personal property that you are using as collateral to secure the loan debt.
My experience as a bankruptcy lawyer in Cincinnati is that while the law allows the company to repossess the property used as collateral few actually are willing to take this step. Some clients have described seeing property listed by the lender’s staff that the client did not even have ownership over. When clients have tried to give up the property so that the associated debt could be discharged through bankruptcy the company would refuse to take the property.
Filing for chapter 7 bankruptcy offers very limited options when it comes to collateral loans, while chapter 13 bankruptcy allows you a variety of additional choices. With a chapter 13 bankruptcy you can typically keep possession of the property and will only need to pay what the real value of the property actually is. This amount is normally far less than the debt owed once the loan is crammed down during the bankruptcy proceedings.
As an example:
A $10,000 loan is taken out from Beneficial and you use your vehicle worth $4,000 as collateral. As a bankruptcy lawyer in Cincinnati I would explain that in order to keep the vehicle in a chapter 13 bankruptcy you must pay the lender something but the loan would be crammed down. You would only pay what the vehicle was valued at, the $4,000, and the balance of the debt would be discharged as an unsecured debt at the end of the bankruptcy case.
In most of the chapter 13 bankruptcy cases that I have filed as a Cincinnati bankruptcy lawyer my clients typically pay little, sometimes just one penny on each dollar owed. This would mean that the lender would receive $60 so that the $6,000 in unsecured debt could be discharged in the bankruptcy case. In addition the interest rate that you pay would be decreased to 4.75%, and that means even more money could be saved.
Chapter 13 bankruptcy does allow for payday loans to be discharged, but these loans can be complicated to deal with. When the loan documents are signed some of the paperwork gives the impression that it is not possible to have the debt discharged, but this is a false impression.
The bankruptcy laws limit the amount of advances and loans that can be discharged when these are made within a 70 day window of when the chapter 13 bankruptcy petition is filed, and this amount is a maximum of $825 in theory but the reality may be different depending on the specific circumstances. As a bankruptcy lawyer in Cincinnati I have found that repayment is not usually requested by payday lenders even when the amount exceeds the limit the bankruptcy laws set out.
With payday loans the lender typically requires that repayment is made using automatic bank account deductions. The loan payment is deducted from your bank account where your paycheck is usually deposited. These lenders usually time the deduction so that the funds are taken as soon as the money goes into your bank account, taking a chunk of your pay before you can take the money out or do anything else to prevent it.
Sometimes a post dated check is used instead of automatic bank account deductions in order to pay off the lender with payday loans. The check is cashed at the first possible opportunity, and a stop payment on the check normally does not work because payday lenders are slick and have plenty of experience collecting so they know how to get their money no matter how you try to stop it.
Once we file for chapter 13 bankruptcy in your case the automatic deductions and loan payments will stop. My experience as a bankruptcy attorney in Cincinnati, Ohio, has taught me a particular way to help my clients avoid payments on payday loans, and my method works very well in most cases. Payday loans are unsecured loans, and they are treated as such during a chapter 13 bankruptcy. Once your bankruptcy petition is filed the lender is no longer allowed to try and collect the debt or access your bank account unless the court allows it.
Will chapter 13 bankruptcy cost me my vehicle?
This is one of the most common questions that I am asked as a Cincinnati bankruptcy lawyer, because going without reliable transportation can make life even more difficult and stressful. Without a way to run errands, go back and forth to work and school, get groceries, and handle other daily responsibilities it can be almost impossible to live a normal life. Some clients admit to me that they have held off even considering bankruptcy because they were afraid they would lose their only transportation, even when this was not the case.
The fact is that chapter 13 bankruptcy does not have to cost you your vehicle!
The reality may be that your vehicle is worth more than what I can protect if you file for chapter 7 bankruptcy, and in this situation a chapter 13 bankruptcy may be the only option available if you want to keep the vehicle and still discharge unsecured debts. An experienced bankruptcy lawyer in Cincinnati, Ohio, can help you determine whether this is the best route to take. Sometimes this can mean paying very little to your creditors, or even nothing at all.
There are two specific categories used for automobiles in the bankruptcy laws, those that are fully paid for and those that are not completely paid off. When a vehicle is fully paid off then the value of the vehicle is the equity that you have in it. If I combine all allowable exemptions I can usually protect up to $5,000 in vehicle equity as your Cincinnati bankruptcy attorney.
The Kelley Blue Book, or KBB, clean trade value of the vehicle is used as the starting value point. Keep in mind that your vehicle could be valued at more or less than the KBB listed value depending on a number of factors. Generally if your vehicle has a value of under $5,000 then a chapter 13 bankruptcy should allow you to keep your vehicle without having to pay anything extra to unsecured creditors.
What if your vehicle has a $10,000 KBB value and is fully paid for though? As a bankruptcy lawyer in Cincinnati in this situation we would discuss filing for chapter 13 bankruptcy and paying your creditors some amount in compensation for the additional equity value that you have in the vehicle which you will keep.
You have a vehicle and the title is jointly held, with the vehicle valued at $10,000. I can offer protection for around $7,350 of the equity in the vehicle. The difference, which would be about $2,650, would be paid to your creditors in a chapter 13 bankruptcy case but the payments would be drawn out for 3-5 years. Your payments could be as low as $44 per month and you would keep the vehicle.
Chapter 13 bankruptcy and vehicle cram down.
As a bankruptcy attorney in Cincinnati I can help you evaluate whether it is possible to pay less for a vehicle than what you currently owe in many cases. Chapter 13 bankruptcy has a very powerful feature called the cram down, and this feature means that you may be able to pay far less than you actually owe on a vehicle. Your creditors may only receive the value of the vehicle regardless of what the current loan balance is because the debt is crammed down by the bankruptcy court.
You owe $10,000 on your vehicle but it has a value of just $6,000. With the cram down allowed in chapter 13 bankruptcy you would pay the $6,000 that your car is worth as a secured debt, and the interest rate that you pay would decrease to 4.75% on this amount. The remaining $4,000 balance of the vehicle loan would be viewed similar to an unsecured debt like your credit card debt or medical bills.
As an experienced bankruptcy lawyer in Cincinnati I will work with you so that you pay a penny per dollar on this debt in most cases, so that you keep your vehicle and only pay around $6,000 despite the fact that you owe $10,000.
Under the bankruptcy law there are certain restrictions on vehicle loan cram downs that you need to be aware of. In order to use the cram down for the vehicle the auto must have been purchased at least 911 days before you file for chapter 13 bankruptcy. As a Cincinnati bankruptcy lawyer I will help you determine the best possible filing date for your chapter 13 bankruptcy petition so that you get the best results possible. Sometimes waiting a few months or even a few days before filing a bankruptcy petition can make an enormous difference in the outcome. Filing for bankruptcy protection 900 or 909 days after the vehicle was purchased would mean that you would be responsible for paying the full amount owed.
In the example above with the $10,000 vehicle this would mean paying the full $10,000, but the interest rate would still go down to 4.75% even though the car loan could not be crammed down. Since the purchase of the vehicle was less than 910 days before we file your chapter 13 bankruptcy petition you would lose out on the cram down benefit. Waiting just a day to file your bankruptcy petition as a bankruptcy lawyer in Cincinnati means I could save you $4,000. Small things can have a big impact on how your case turns out, and I make sure that we analyze and carefully plan everything so you get the best results possible.
In the past I had a client who wanted to file for chapter 13 bankruptcy immediately because his wages were being garnished and he wanted to stop this garnishment. As a Cincinnati bankruptcy lawyer I never rush, I always do a thorough analysis of your situation before determining what steps to take. After evaluating the situation I advised the client that waiting only 4 weeks would allow us to cram down his vehicle loan and save him around $8,500. The client was more than willing to continue with the garnishment for a month, because he lost a little money for the next few paychecks but gained a substantial amount by waiting.
Even when a vehicle loan cram down is not possible you could still benefit greatly by filing for chapter 13 bankruptcy and paying for your vehicle in the process. As a bankruptcy lawyer in Cincinnati I have had many clients who are paying an outrageous rate of interest, sometimes close to 25%, on their vehicle loans. Even when the car is valued at the amount owed the interest charges alone can be devastating to their finances. By putting the vehicle in the bankruptcy petition the client will save thousands just in the interest paid to the lender.
Purchasing a vehicle before or after bankruptcy.
What happens if you know that you will not keep your current vehicle? As a bankruptcy lawyer in Cincinnati I see this scenario all the time. Maybe your car is older and frequently breaks down. Maybe you owe far more than your vehicle is actually worth. You may want to send the vehicle back to the creditor and wash your hands of the whole mess.
You need reliable transportation and that means having a vehicle. In this situation as a Cincinnati bankruptcy lawyer I would advise you to purchase a vehicle before we file your chapter 13 bankruptcy petition, even though this loan could not be crammed down due to the recent purchase date. You would not benefit from a cram down but you would still benefit from the interest rate being lowered to 4.75%, and the debt that you owe on the previous vehicle would be discharged since the creditor received the property back. The old creditor will sell the old vehicle at auction, and any remaining balance on the loan is treated like a medical bill or credit card debt during chapter 13 bankruptcy because it is an unsecured debt at this point.
Apartment leases: Should you stay or should you go?
As a bankruptcy attorney in Cincinnati, Ohio, many of my clients are worried about their apartment lease if they file for chapter 13 bankruptcy protection. Some apartment complexes may ask that you reaffirm the current lease but even this is uncommon. As long as you continue to make your monthly lease payments on time your lease will continue as usual.
Since you owe a debt because of the lease we must list your apartment in the chapter 13 bankruptcy petition, all debts must be listed for the court, and we will state in the petition that you intend to keep the lease and continue with your monthly payments. Filing for chapter 13 bankruptcy will not cause you to be evicted as long as your rent payments are current. If you fail to make the required monthly payments then an eviction is possible though, just as if you never filed for bankruptcy.
At times you may be better off moving and breaking your current apartment lease though. In my experience as a bankruptcy lawyer in Cincinnati, Ohio, this may be the best move in certain situations. If you are having financial problems for any reason, whether it is a recent divorce, the loss of income, or another type of setback, then you may no longer be able to afford your current lease.
With a chapter 13 bankruptcy case you could move, break the current lease, and discharge any remaining payments that would be due under the lease. You could also discharge any damage claims that are brought later on by the landlord during your bankruptcy. The best way to handle this is to move out and then file for chapter 13 bankruptcy protection, including the lease debt in your petition so that it can be discharged by the court.
A big concern that I hear all the time as a Cincinnati bankruptcy lawyer is whether filing for chapter 13 bankruptcy will prevent a client from finding another place to rent, and this is not typically a problem. In over 30 years of practice as a bankruptcy lawyer in Cincinnati, Ohio, I have filed many thousands of chapter 13 bankruptcy cases and it is extremely rare for clients to have a problem finding a new residence no matter where they want to reside.
Will chapter 13 bankruptcy make you lose your home?
A lot of the clients who visit my Cincinnati bankruptcy attorney practice own or are in the process of purchasing their homes. These clients are usually making monthly mortgage payments to purchase the home and chapter 13 bankruptcy does not cause them to lose their home.
A chapter 7 bankruptcy can allow you to keep your home as long as your payments are current, but if you are behind in payments then the creditor can ask the bankruptcy court for permission to move forward with the foreclosure process and this may be granted. Filing for chapter 7 bankruptcy will slow down the process of foreclosure if you are behind in mortgage payments but it will not prevent this from happening eventually.
The same thing can be achieved with a chapter 13 bankruptcy but under this chapter of the bankruptcy code you will have greater options available. As a bankruptcy attorney in Cincinnati, Ohio I can help you determine the best approach to take so that you keep your home AND get the financial relief that you need.
When we file a chapter 13 bankruptcy petition this can stop the foreclosure process and allow you to make up any payments that you have missed over the next 3-5 years. This is one of the biggest reasons why clients use chapter 13 bankruptcy. Once you fall behind on your mortgage payments most lenders will not work with you at all, they don’t care about your personal situation or financial difficulties, and as soon as you fall 3 months behind the lender will usually send your loan out to a legal firm to start the foreclosure process.
It is important to understand that the foreclosure process can be stopped by filing for chapter 13 bankruptcy, but only if the bankruptcy petition is filed before a sheriff sale date has occurred. It is very important to consult with an experienced and qualified bankruptcy lawyer in Cincinnati, Ohio, if you are already in foreclosure or you know that this is coming.
Even if the lender has already sued you, you have already had a court date, and even if a judgment has been entered against you. Foreclosure can be stopped even when a sheriff sale date has been set as long as the sheriff sale has not happened yet. As long as we file your chapter 13 bankruptcy petition before the scheduled sale date we can halt the foreclosure process.
As an experienced Cincinnati bankruptcy attorney I can explain the numerous advantages that a chapter 13 bankruptcy case offers as far as mortgage debt is concerned. Unlike a vehicle loan which can be crammed down this is not possible with mortgage debt, but we may be able to eliminate any 2nd or 3rd mortgages that you owe and have these discharged just like any other unsecured debt such as medical bills and credit card debts. If you have been sued in the past and there are any judgment liens against the home these may also be removed during a chapter 13 bankruptcy case.
In the current real estate market today many people have found that the value of their home has dropped considerably, leaving you with a home that is worth less but a mortgage debt that is much higher. As a bankruptcy lawyer in Cincinnati I can work with you to strip off any secondary mortgage debt on your home in many cases. Even if you only have a single mortgage loan or you are unsure whether you want to keep or give up your home a chapter 13 bankruptcy gives you options, and you can even change your mind after we file your bankruptcy petition with the court.
You read that correctly. When we file your initial chapter 13 bankruptcy case your stated intentions could be to hold on to your home, but this could change once you see how your budget works out. If things go as planned and your desire to hold on to the home continues then a chapter 13 bankruptcy will help you do this.
If you change your mind in the middle of your bankruptcy case because things did not go as planned then we will simply modify the plan in place so that the home is returned to the lender and any deficiency that you owe will be discharged along with your other debts when your chapter 13 bankruptcy case ends. Even when you have a change of heart during a chapter 13 bankruptcy case you will still be able to reside in the home for months in most cases while the foreclosure process plays out.
How does chapter 13 bankruptcy affect land contracts?
What if you have a land contract to purchase a home, or you are selling property using this method? If you are the purchaser on the land contract then you have a real estate interest in the property just like you would with a traditional mortgage. The residential real estate interest exemption will protect your interest in the property.
If you are the seller on the land contract then this changes things because you are not allowed to use a residential exemption, and you may not be protected for any equity that you have in the property or the land contract either. It is very important to consult with an experienced bankruptcy lawyer in Cincinnati to make sure that you get the best possible results.
Whether you are the buyer or the seller on the land contract a chapter 13 bankruptcy case will give you a number of options. Many land contracts require that the buyer pay the full agreed on purchase price within a few years of entering into the land contract, with a balloon payment due by a specific date. Filing for chapter 13 bankruptcy protection may make it possible to extend the time you have before the balloon payment must be made by a maximum of 5 years but you will still owe the full amount due. Land contracts are similar to traditional mortgages and can not normally be crammed down like car loans can. After chapter 13 bankruptcy financing may be difficult to obtain but this is still possible. I have helped a number of clients successfully gain financing even after I filed a chapter 13 bankruptcy petition for them as their Cincinnati bankruptcy attorney.
If you sell property on a land contract then you are entitled to payments in the future, and you could lose the right to receive these payments if you file for chapter 7 bankruptcy. Using a chapter 13 bankruptcy instead will give you a much wider range of options when it comes to land contracts and could protect your finances better.
Credit unions and chapter 13 bankruptcy.
One special situation that deserves to be covered involves credit union debt, and a legal concept called cross collateralization. Many of my clients who consult a bankruptcy attorney in Cincinnati, Ohio owe debts to a credit union, and these organizations are normally easier to deal with and more willing to provide financing. Credit cards, mortgage loans, vehicle loans, and financial accounts may all be through the same credit union because this is the banking institution that the client uses.
As a bankruptcy lawyer in Cincinnati I have seen how cross collateralization can cost clients property or burden the with excessive debt in a chapter 7 bankruptcy case. Unlike traditional banks credit unions link all of your debts and all of your collateral together, so any credit card debts and personal loans will be secured by the home or vehicles that you also have loans for through the institution. This means the credit union could take your vehicle, empty your checking or savings accounts, or even foreclose on your home if you miss a credit card payment.
Often the first time that clients who visit my Cincinnati bankruptcy attorney practice find out about cross collateralization is when they miss a payment on their personal loan or credit card and their vehicle is repossessed. The member of the credit union is usually caught by surprise, and they argue that their vehicle or mortgage payment is current. These clients may also find that their accounts at the credit union have been emptied, leading to bounced checks, insufficient funds fees, and other financial devastation. At this point some expletives are sure to fly.
At this point the credit union will explain that the vehicle or home is collateral for all of the debts owed to the organization, and any late payments mean that the credit union can take funds from any accounts at the institution or even repossess your vehicle or start the foreclosure process against your home without any warning at all. This is a difficult way for clients to learn about the cross collateralization concept.
During a chapter 7 bankruptcy case cross collateralization can cause serious problems. My experience as a bankruptcy lawyer in Cincinnati has shown that clients often have both secured and unsecured debts with the same credit union. These clients hope to keep their vehicle but want to discharge the debts associated with personal loans and credit card accounts at the institution without payment.
Usually credit unions will not agree to this type of arrangement, in fact it is extremely rare for them to do so. If you want to keep your vehicle during a chapter 7 bankruptcy case the institution will demand that you also agree to pay for the unsecured debts such as personal loans and credit cards. The total amount of the debts owed is typically far more than the vehicle value.
It is not possible for any Cincinnati bankruptcy lawyer to force a creditor to agree to let you affirm only the vehicle, and so in a chapter 7 bankruptcy case I will usually advise you to give the vehicle back to the creditor so that any debt left after the vehicle is sold by the creditor can be discharged without you having to pay any money.
Cross collateralization can be effectively dealt with using chapter 13 bankruptcy instead, breaking these links and providing additional options to you. With a chapter 7 bankruptcy you would have to make an agreement to pay for all the debts owed to the credit union if you want to keep your vehicle, and this means being on the hook for any unsecured debts like credit cards and personal loans as well as the vehicle loan. With a chapter 13 bankruptcy this is not normally true, you can usually keep your vehicle and only have to pay the amount of the value of the vehicle.
You have a vehicle valued at $10,000. You have $8,000 left on your vehicle loan, a $3,000 personal loan, and $5,000 in credit card debt, all with the same credit union. As an experienced bankruptcy lawyer in Cincinnati we could file a chapter 13 bankruptcy petition that would allow you to keep your vehicle and only pay the value of the vehicle, $10,000, to the credit union. Cross collateralization means that you owe the institution a total of $16,000, far more than the $10,000 that your vehicle is valued at. Legally the credit union is a secured creditor for the first $10,000 only, and the balance of $6,000 is considered an unsecured debt by the bankruptcy court and can be discharged without the loss of your vehicle.
What happens to cosigners if I file for chapter 13 bankruptcy?
Cosigners are only offered limited protection if you file for chapter 13 bankruptcy. During my many years of practice as a bankruptcy lawyer in Cincinnati I have seen relationships fall apart when cosigners are surprised by bankruptcy. Normally cosigners are close friends or relatives, and if your chapter 13 bankruptcy case does not pay your debts 100% then any cosigners could be on the hook for any remaining balance. This can lead to hard feelings if the cosigner was caught by surprise. Most chapter 13 cases do not pay 100% of the debts listed and that can create difficulties for anyone who cosigned on the debt.
If you decide to keep collateral on a debt that is secured by the property and there is a cosigner then the cosigner could still be held liable for any balance that is discharged when your chapter 13 bankruptcy case ends. In fact there are times when the creditor will as for permission from the bankruptcy court to try and collect the remaining balance discharged in your case from any cosigners. This is a very complex situation, one you should not attempt without a very experienced and highly qualified bankruptcy attorney in Cincinnati, Ohio.
What if you are the cosigner for debt that is paid for by another person though? Maybe you cosigned for an adult child who needed a vehicle but could not get one without someone to cosign for the debt, and this child is using the vehicle and making the loan payments. You want your obligation discharged during your chapter 13 bankruptcy case but you do not want to harm your child’s credit or cause them to lose the vehicle that they need and depend on.
As an experienced bankruptcy lawyer in Cincinnati and a certified debt specialist I can explain the available special plan provisions that we can put in place to achieve these goals. This situation is common and is normally not a problem as long as everything is handled properly so that the cosigner is not adversely affected and your bankruptcy case goes smoothly.
It is not possible to hide the fact that you filed for chapter 13 bankruptcy protection from any cosigners. These individuals must be listed in the bankruptcy petition, this is a legal requirement, and all cosigners will receive a notification about your filing from the bankruptcy court. If you have one or more cosigners I advise you to discuss the situation with them before we file for chapter 13 bankruptcy protection so that the relationship is not damaged when they are surprised by the court notice when it comes in the mail.
Utilities can be discharged using chapter 13 bankruptcy!
Just like any unsecured debt, such as credit card debt or unpaid medical bills, past due utility amounts can be discharged using chapter 13 bankruptcy. As a bankruptcy lawyer in Cincinnati I do explain to potential clients that they may be forced to pay a security deposit in this situation, just like a new customer with the utility company. I also explain that if there is already a security deposit with the utility that this can legally be kept by the company and applied to any balance owed when you file for chapter 13 bankruptcy.
What if you file for chapter 13 bankruptcy but you are not behind in your utility payments though? In this situation the right thing to do is for the utility company to discharge any balance that is unpaid up to the date that you file the chapter 13 bankruptcy petition. This is not always done in every single case but it is technically what the utility company is supposed to do.
Say your electric bill is due on March 30, and you file for chapter 13 bankruptcy on the 15th of the month. The amount owed up until the 15th should be discharged by the utility even though the bill is not due until the 30th, making half of the bill eligible for discharge. Sometimes the utility company will discharge this portion of your debt even when it is not listed in your chapter 13 bankruptcy petition.
Chapter 13 bankruptcy normally will not discharge student loan debt!
In general student loans will not be discharged during bankruptcy, and this is true whether you use a chapter 7 bankruptcy or a chapter 13 bankruptcy. It does not matter if your student loans are a federal product or offered by a private lender. Technically student loan debt discharge is possible through bankruptcy but this is close to impossible in reality.
In order to have student loan debt discharged using any bankruptcy proceeding you will have to show that it is currently impossible to pay any of this debt, both now and in any foreseeable future. As a bankruptcy lawyer in Cincinnati, Ohio, I usually do not handle cases where the client hopes to discharge student loan debt because of the difficulty involved. These cases are usually a waste of time and money for the client.
I have found that if it is possible for you to go into court and argue to have student loans discharged then the fact that you walked into court in the first place causes you to lose this argument. Walking into court means that it may be possible for you to pay something in the foreseeable future.
The U.S. Government guarantees student loans, so having these discharged means suing the USA itself. This is a feat with an almost impossibly low success rate, and I do not want to charge clients when I have little to no chance of winning on their behalf. If you are in a situation where you really can not pay anything on your student loan debt and you have a serious disability then we can evaluate the non bankruptcy methods available for student loan forgiveness.
If we file for chapter 13 bankruptcy protection then you could get some protection from student loan creditors for 3-5 years as the case proceeds. In that time you could gain an increase in income, and other debts may be discharged. This is a combination that could free up financial resources and allow you to pay some or even all of the student loan debt that you have.
I have handled chapter 13 bankruptcy cases as a bankruptcy lawyer in Cincinnati where the client had a majority of student loan debt which can not be discharged, but also a significant amount of medical bill and credit card debt as well. In this situation most of the money that you pay will be applied to your student loan creditors, and other creditors may only receive a very small percentage of your payments. When your chapter 13 bankruptcy case is finished you will still owe any unpaid student loan debt but any remaining debt on medical bills and credit cards will be discharged and eliminated. If you owe any vehicle debts these are also taken care of at this point, and you will be in a better place to enter a payment plan to pay any remaining student loan balance.
What happens to rent to own debt in chapter 13 bankruptcy?
Rent to own debt is another type of debt that involves special consideration if you file for bankruptcy protection. As a Cincinnati bankruptcy attorney I can help you get these debts discharged using chapter 13 bankruptcy, however this often requires that you return the property to the creditor if the debt is to be discharged because of the way that these contracts are structured. Since these deals are normally detrimental to consumers I almost always recommend that my clients refuse to reaffirm the debt and keep the property involved.
Once in a while I do have a client who has paid for an extended time and who is very close to paying off the contract in full. In these cases returning the property with so little left owing does not make sense, and we will utilize a chapter 13 bankruptcy special plan provision so that the contract is fulfilled. This means that the property is paid for and you can keep it.
Chapter 13 bankruptcy and tax refunds.
A chapter 13 bankruptcy does offer a limited amount of protection for your tax refunds but the reality is that it is not as simple or cut and dried as it sounds. In general you will be able to keep $800 of any tax refund but there are other factors and circumstances that could affect this. The tax refund amount that will be subject to your chapter 13 bankruptcy case will depend on when your bankruptcy petition is filed, the filing date can make a big difference in how your case turns out. The date that you actually receive your tax refund is irrelevant, the date when you file for bankruptcy is the only date that matters.
Because a chapter 13 bankruptcy case lasts for 3-5 years your tax refund will be examined annually through the process. Making some withholding adjustments could help you minimize the tax refund amount that you are owed, and the amount that would be subject to the bankruptcy court. In addition this step could put more money in your paycheck each week, and this is a positive thing for your budget as well.
Filing for chapter 13 bankruptcy does not mean you will lose property in most cases!
Most people realize by now that filing for chapter 13 bankruptcy protection does not mean that you have to lose property. You may not know exactly what you can keep but I assure you as an experienced bankruptcy lawyer in Cincinnati, Ohio, that this step will not cost you all the property that you have. A majority of people who file for chapter 13 bankruptcy do not lose any property at all. In fact this can be the solution if you have value in any property that would be problematic in a chapter 7 bankruptcy.
When you file for chapter 13 bankruptcy you pay less than the total amount that you owe as compensation to your creditors in order to keep the property, and this lower amount can be paid over a period of 3-5 years without any interest at all.
All of the property that you have is typically used, and little if any of your property has any practical resale value in most cases. In order to replace all of your property with new items you will probably pay more than $10,000, but that is not the test that you must pass. The test is to determine what the property resale value would be if you sold this property in the current condition, and used property is worth far less or even nothing at all. Because of this most people find that chapter 13 bankruptcy actually fully protects all of their property.
As a bankruptcy lawyer in Cincinnati I will discuss with you what property we can protect, and what property may be at risk. Bankruptcy will not protect all types of property. Stocks and bonds that you own are not usually protected if you file for chapter 7 bankruptcy. This can be a problem for clients who own employee stocks but are otherwise a good candidate for a chapter 7 bankruptcy case. Say you own $20,000 in employee stocks and you do not want to lose these assets. A chapter 7 bankruptcy would not be able to do this, but a chapter 13 bankruptcy may be able to resolve your debts without the loss of these stocks in some cases.
Another situation that I see all the time as a bankruptcy attorney in Cincinnati, Ohio, is when parents place real estate in their adult child’s name for estate planning purposes. This is done to eliminate the need for probate when the parents pass away, but it can create a legal nightmare if the adult child wants to file for chapter 13 bankruptcy. Since the child does not reside in the residence there is no equity exemption in the real estate with a chapter 7 bankruptcy case, but the parents still live in the home so losing the property is not a viable choice.
Unfortunately it is not as simple as simply putting the title back into the parents name, this is illegal. You must be careful not to transfer any property to anyone else within a certain time before you file for bankruptcy. This is one of the difficult situations that I deal with as a Cincinnati bankruptcy lawyer on a regular basis, and we can do some extensive planning to deal with the situation so that you get the best results and the property is protected as much as possible.
In many cases there are things that we can do so that you keep property which would normally be lost in bankruptcy, especially when you file for chapter 13 bankruptcy. This process is exemption planning and it is appropriate and completely legal. I feel that any bankruptcy lawyer in Cincinnati, Ohio, who does not understand the exemption planning process extremely well really should not be handling bankruptcy cases in the first place.
During the exemption planning process we can take certain assets that could be at risk in a chapter 13 case and convert them into protected assets so that they are not lose. As an example we will assume that you have $10,000 between cash on hand and your bank account balance. One possible step we could take, depending on your age and what time of the year it is, would be to take this $10,000 and use it to buy private IRAs.
This can be especially beneficial when it is close to the end of the year, and both spouses can maximize their contributions to an IRA in December and then again the next year as well. This can convert funds that may be lost during a chapter 13 bankruptcy into accounts that are protected under the bankruptcy laws. By using proper planning I just saved my clients $10,000.
Chapter 13 bankruptcy typically protects retirement accounts!
In general bankruptcy protects retirement accounts 100%, and this is true with both chapter 7 and chapter 13 bankruptcy, but this rule does have some exceptions. As your bankruptcy lawyer in Cincinnati I can determine whether your retirement accounts will be protected. Retirement accounts which are related to your employer are almost always offered protection during bankruptcy without fail. Once in a while I see certain types of retirement accounts as a Cincinnati bankruptcy attorney which do not have protection under the bankruptcy laws though. That is because these are not true retirement accounts, they may be called this term but they are actually something different.
Say you have been putting funds into a mutual fund with the intention of using this account when you retire at some point in the future. In your mind this is a retirement account. As a bankruptcy attorney in Cincinnati I have found that mutual funds are not always protected even in this situation though, and the bankruptcy laws and court may not view the account as a retirement account.
With a chapter 7 bankruptcy filing these funds could be taken because they are not legally protected. A chapter 13 bankruptcy case may provide better results in this situation and there may be steps we can take to protect some or all of these funds.
Another area of concern is inherited accounts, and the courts have recently ruled that accounts which you inherit are not necessarily protected under the bankruptcy code. An experienced Cincinnati bankruptcy attorney can make a big difference in how your case turns out and the results that you get.
Will I need to go to court to file for chapter 13 bankruptcy or attend court hearings?
In many of the chapter 13 bankruptcy cases that I handle as a bankruptcy lawyer in Cincinnati, Ohio, my clients never have to attend a bankruptcy hearing. These hearings are usually held with the trustee in a meeting room, not in the court room in front of the judge, and I will represent you at these hearings if there is no need for you to attend.
By the time a 321 hearing occurs in a chapter 13 bankruptcy case any issues with your case are already apparent, but it is normally too late to do anything about it. I stress this to my clients because by this point the damage is done and there is usually no way to repair things. This entire scenario can be avoided by handling everything properly from the very start, and this is something that requires a very experienced and knowledgeable bankruptcy lawyer in Cincinnati, Ohio. Unfortunately I see Cincinnati bankruptcy attorneys caught by surprise all the time, and this can be very costly for their clients.
One bankruptcy lawyer was destroyed by the bankruptcy trustee and embarrassed at the hearing when the trustee questioned a personal injury settlement that the client had listed in their bankruptcy petition. The lawyer was caught by surprise because he did not prepare properly and failed to ask some important questions. The settlement was not from a personal injury that the client had, it was inherited from the client’s mother when she passed away.
This had a huge impact on the outcome of that case because personal injury settlements are usually protected up to $20,000 under the bankruptcy laws but inherited settlements are not given this same protection. This means that the client was not entitled to an exemption for the settlement, and the trustee took the personal injury account in the chapter 7 bankruptcy proceeding. I am almost positive that the relationship between this bankruptcy lawyer in Cincinnati and his client was never the same after that.
I tell my clients this story to make a point. As a Cincinnati bankruptcy attorney I use numerous checklists that include many dozens of factors and items, and these checklists are checked and gone over many times before we are even ready to file your chapter 13 bankruptcy case. This ensures that we have all of the important information and documentation that we need, and that there are no unanswered questions that could cause our clients to lose protection or property.
We go above and beyond what most bankruptcy lawyers in Cincinnati do before filing a case, sometimes going overboard in the process, but you can never be too prepared when the outcome of the case is so important to the client. The Cincinnati bankruptcy attorney that you choose to handle your chapter 13 bankruptcy case is one of the most important decision you will ever make. Once a case is damaged it is usually too late to reverse any mistakes or fix any errors. Finding out that you will lose property that you want to keep can be devastating, but by this point you can not back out just because of this.
A chapter 13 bankruptcy case can be extremely complex area of law, and in order to be successful and get the fresh start and financial recovery that you deserve you need an experienced bankruptcy attorney in Cincinnati, Ohio, representing you. Don’t take a chance with something so important, your financial recovery and successful outcome depend on the bankruptcy lawyer that you choose. A board certified bankruptcy specialist is the best choice in this situation. You would not have your family doctor perform brain surgery if this was needed, or have a math teacher do tax returns for a Fortune 500 company. So why would you trust a legal jack of all trades to handle your financial reorganization rather than a board certified bankruptcy specialist?
How to get the fresh start and the credit that you deserve after your chapter 13 bankruptcy.
Chapter 13 bankruptcy is supposed to be a fresh start, and it can be the first step in the right direction but it does not automatically do this without some effort on your part. Bankruptcy alone is not the guarantee of financial recovery that many people believe it is.
Most bankruptcy lawyers in Cincinnati do not offer any assistance once your chapter 13 bankruptcy case is finished. In fact I have not found any other Cincinnati bankruptcy attorney, or even another attorney in the entire state of Ohio, who offers their clients a formal credit report correction and credit rebuilding program like the one that I offer to my clients.
The fact is that I am the only Ohio bankruptcy lawyer who is a board certified bankruptcy specialist, a certified debt arbitrator, and a certified credit counselor. I do a lot more than just file bankruptcy cases for my clients. The additional non attorney designations that I have, and the board certification that the Ohio Supreme Court recognizes, mean that I can assist my clients in rebuilding credit after their chapter 13 bankruptcy case.
These are things that bankruptcy lawyers are not taught in law school although I think they should be!
You may believe that a chapter 13 bankruptcy can ruin your credit for up to 10 years after the case ens, and this can be true if you do not take steps to prevent it. You could end up with poor credit for years after your bankruptcy case is finished if you do not take steps to clean up your credit reports and improve your credit score, but this is not necessary and you can minimize the damage that the bankruptcy causes with some help from a qualified bankruptcy lawyer in Cincinnati.
I have developed a formal program with a specified course of action that can help clients achieve good credit and clean up their credit reports once they are finished with their chapter 13 bankruptcy case. As a result these clients have found that they are eligible for decent interest rates on car loans within a few years after their bankruptcy is discharged, and many even qualify for mortgage loans. This doesn’t just happen though, it requires some work and effort on your part and the knowledge necessary to make this happen.
Credit reporting after your chapter 13 bankruptcy.
Many people are not aware that consumers actually pay around $1 billion in debt that was previously discharged during bankruptcy. This is a true fact, and it happens because creditors typically do not update the information on your credit report once your chapter 13 bankruptcy case is filed.
You do not legally owe any debts that are discharged as part of your chapter 13 case, but these debts frequently appear on your credit report as if you still owe them in spite of the discharge. Creditors may take the position that they are technically in the right because they are not reporting any debts owed by you, but they are also not updating your accounts with the current information either. In fact that have completely stopped reporting anything at all.
Making these creditors report the current situation and clean up the accounts on your credit report is not an easy task, and it involves using the proper dispute procedures. I have built this procedure into my chapter 13 bankruptcy practice so that my clients get a real fresh start and the financial reorganization that they truly need.
In my decades of practicing as a bankruptcy lawyer in Cincinnati, Ohio, I have had clients who have used credit repair companies, and these clients were generally not impressed with the results that these companies provided. These firms go by names like Bradley Allen Law or Lexington Law, and they are supposed to help you clear up any errors on your credit report and improve your credit rating once your chapter 13 bankruptcy case is finished. My understanding is that many of these legal firms take a shotgun approach to this task, disputing every single entry on your credit report in the hope of having something removed. My experience as a Cincinnati bankruptcy attorney is that there is a better way.
Instead of the shotgun approach I use a scalpel, and every entry on your credit reports will be carefully evaluated and analyzed before I do anything else. Once the analysis is finished I only dispute the entries which are wrong AND that hurt my client. There are some credit report errors that can actually be favorable to a client and their credit score, and removing these entries could harm their credit instead of helping it. This method takes more time and effort but it also usually provides much better results.
How long will the chapter 13 bankruptcy recovery process take?
The length of time necessary for the chapter 13 bankruptcy recovery process will depend on the specific approach that you decide to take once your bankruptcy case is finished and you receive your discharge. Some clients tell me that they will use a cash only lifestyle once their bankruptcy case is done. As a bankruptcy lawyer in Cincinnati I strongly advise my clients against this because it can prevent you from rebuilding your credit as soon as possible after your bankruptcy.
The only way to improve your credit score is to use credit properly. Only using cash will give you the opposite result and end up harming your credit score and extending the time needed to rebuild your credit in the long wrong. Going in the opposite direction and trying to get approved for too much credit can be just as damaging though, just like using any credit that you qualify for improperly. The right approach and balance is needed in this situation.
As an experienced bankruptcy attorney in Cincinnati, Ohio, I can show you the right way to achieve these goals. When you follow my plan and use my approach your chapter 13 bankruptcy recovery may only take a year or two. Within this time you should qualify for a vehicle loan at a decent rate of interest, and within 3-4 years after your bankruptcy discharge even a mortgage loan should not be a problem as long as you have sufficient income to qualify. Your chapter 13 bankruptcy should not prevent you from doing this as long as you take the right steps.
Chapter 13 bankruptcy can be a very powerful financial reorganization tool when used properly. Between 60% to 70% of the clients who come to my Cincinnati bankruptcy law practice qualify for a chapter 7 bankruptcy, but that does not mean that this is always the best possible solution. A chapter 13 bankruptcy filing can often give you a greater degree of flexibility, more available options, and better results from your financial reorganization efforts.
A lot of the chapter 13 bankruptcy information that you look up online can be confusing, useless, misleading, or flat out wrong. Even when you manage to find information that is truthful this is not normally very helpful because this information still needs to be applied and the application can be complicated and extremely complex. This is why it is so important to consult with a bankruptcy lawyer in Cincinnati, Ohio, one who is a certified bankruptcy specialist with years and years of experience in chapter 13 bankruptcy cases.
You could worry about median income amounts, spend time trying to learn about the means test, search for exemption amounts and categories, and research other areas of the laws for a chapter 13 bankruptcy case. This may not be a complete waste of your time but it also will not answer the important questions that you need answered for your specific situation. Only an experienced and highly qualified Cincinnati bankruptcy attorney can do this.