Do you need a Chapter 7 Bankruptcy Attorney?
As a Dayton Chapter 7 Bankruptcy Attorney I have represented thousands of clients in Dayton, Ohio over the last 34 years. I know the Dayton Ohio Bankruptcy system and I can get you optimal results.
With Chapter 7 You Can:
- Keep Your Car
- Keep Your Home
- Stop Creditors in their Tracks
- Stop Repossession
- Stop IRS Tax Liens
- Get a Fresh Start
Chapter 7 bankruptcy in Dayton Ohio is often referred to as a “fresh start.” More people file chapter 7 bankruptcy than chapter 13 bankruptcy. If you’re considering filing chapter 7 bankruptcy and live near Dayton Ohio, you’ll need to know if you qualify. Then consider what property you might lose in chapter 7 bankruptcy. Finally what are the pros and cons of filing chapter 7 bankruptcy in Dayton Ohio, compared to chapter 13 bankruptcy?
Eligibility for Chapter 7 Bankruptcy in Dayton Ohio
One test for chapter 7 eligibility is your income level. Basically, if your income leaves little or perhaps nothing to pay your debts, after you pay your basic living expenses, you probably qualify for chapter 7 bankruptcy on an income basis. Income is not the only test, however. There are other chapter 7 eligibility tests, as well.
Bankruptcy Means Test
Means test for income. Chapter 7 bankruptcy has a “means test” which must be completed if, and only if, your gross income exceeds the median, or average income for your family size. The median income amount is determined by law and is adjusted periodically.
The means test is widely misunderstood. Here is an actual quote from a very high ranking website:
“To qualify for a Chapter 7 bankruptcy, the debtor must earn less than the state median income on a monthly basis and submit to a “means test” that examines their financial records, “
Find this at: debt.org
This is typical of incorrect information you will find on the internet, even on high-ranking and apparently legitimate, trustworthy sites. It’ just not true.
First, it is not true that you must earn less than the median income to file chapter 7 bankruptcy.
As a board certified consumer bankruptcy specialist I have filed hundreds of chapter 7 bankruptcy cases in Dayton Ohio for clients who make more than the median income for their family size.
If your average income in the six month period prior to filing chapter 7 bankruptcy is over the median income for your Dayton family size, you then have to actually DO the means test.
If your average income is under this threshold, you don’t even have to do the means test calculation!
If your income is over the median do you automatically file chapter 13? No. You have to do the means test to see what the result is. Your income can be over the median and you can still “pass” the means test and file chapter 7 bankruptcy.
The “means test” doesn’t really “examine your financial records.” Nor does the trustee monitor your bank account. The means test is similar to a tax return. You “plug in” certain information, like your secured debt (car and house) payments, the total of your unsecured debts, and some other information. You will either “pass” or “fail” the means test.
If you “fail” the means test, you have to file chapter 13, right?
You could still file chapter 7 bankruptcy in Dayton so long as you can demonstrate “special circumstances” exist. The most common “special circumstance” we are seeing now is layoff and job furlough due to COVID-19. Even if your income for the last six months was above the threshold, if it’s gone now, this is a “special circumstance” which would allow you to file chapter 7 bankruptcy in Dayton Ohio.
Prior Bankruptcy Filings
Prior bankruptcy filings can disqualify you from filing chapter 7 bankruptcy. You must wait at least 8 years from the time you file a chapter 7 case until you are eligible to file another chapter 7 bankruptcy.
If you previously filed a chapter 13 bankruptcy, then you must wait 6 years from the filing date of that chapter 13 bankruptcy before you are permitted to file a chapter 7 bankruptcy.
If you don’t meet these tests, you should know that you only need to wait 4 years to file a chapter 13 bankruptcy after a chapter 7 bankruptcy. And, a chapter 13 bankruptcy might pay as little as a penny on the dollar to your unsecured creditors This makes a chapter 13 the functional equivalent of a chapter 7.
Keeping Property in Dayton Chapter 7 Bankruptcy cases
In Dayton Ohio, the chapter 7 bankruptcy trustees will review your bankruptcy petition to see if all of your property is protected. Nearly all of our property is protected by exemption statutes. So, everything you read on the internet about chapter 7 bankruptcy being a “liquidation bankruptcy where all your non-exempt property is sold and the money paid to your creditors” is meaningless! For most, there isn’t any property that is not protected by Ohio Exemptions.
Generally, you will keep your household goods and furnishings, and if you want to keep your car, the equity must be covered by exemptions. Houses are also protected. Equity up to over $130,000 is protected, so you can literally have a totally paid off house, and file chapter 7 bankruptcy in Dayton Ohio, keep the house and pay NOTHING on the credit card debt.
Credit After Bankruptcy
Next to the means test, there is probably no bankruptcy topic more MISUNDERSTOOD than what happens to your credit after bankruptcy. There is good reason for all the confusion, and mis-information. Again, an example from debt.org:
“Bankruptcy Will Ruin Your Financial Future — Yes, credit will be difficult to obtain. Yes, higher interest rates will be a given for the 10 years the bankruptcy is expected to remain on your credit report. But in time, there is a way back.”
If you take the proper steps, in the proper order, and the proper time, as I teach in my Credit Recovery Course the above quote will most assuredly not be true for you.
Credit is actually NOT difficult to obtain after you file chapter 7 bankruptcy in Dayton Ohio. On the contrary, it will be TOO easy to obtain. But credit that is easy to obtain is often not the credit you want to obtain.
High interest rates COULD, SOMETIMES be a given for 10 years. If you do nothing to improve your credit, that might be your lot in life. But if you follow the right steps, you could have a 650 – 700 FICO score in as little as a year after your chapter 7 bankruptcy discharge.
My clients, after following the steps I’ve recommended for years as a certified credit counselor, often have scores that high, and are buying cars and even houses in only a few years. This is true EVEN THOUGH THE BANKRPUTCY IS STILL ON THEIR CREDIT REPORT. Lesson: bankruptcy on your credit report does NOT mean your score will remain low.
Some Pros and Cons of Filing Chapter 7 Bankruptcy in Dayton Ohio
All debts erased, except those you chose to keep, or those that are not discharged, like child support and student loans.
Short. The entire case is generally over in 5 months.
Snapshot of debt and income on day you file, with certain exceptions. For example, inheritance you get within 6 months of filing. So if you play the lottery and win big the day after you file, you, not your bankruptcy trustee, get to keep it.
Immediate protection. Stops lawsuits, garnishment instantly,
Generally need to pay all costs and fees up front, no payment plan like in Chapter 13.
Can’t lower interest rates on car loans, like you can in chapter 13.
Won’t help you if you are behind on secured debt you want to keep. Need to be current. If behind, will need to look into chapter 13 to “cure” the missed payments.
Short. Limited protection. Cases is over in 5 months. If you are seeking longer term protection, like from a student loan garnishment, you’d be better off with a chapter 13 which runs for 3 to 5 years.
Cannot generally voluntarily dismiss. If a mistake is made, and you discover the trustee is able to take an asset you have, you are generally not permitted to dismiss the case. In chapter 13, you may generally dismiss at any time, for any reason.
There are twice as many chapter 7 bankruptcy cases filed in Dayton Ohio than chapter 13 cases. Chapter 7 is a powerful tool to get a fresh start, but it has some limitations compared to chapter 13. Both chapters should be considered before filing a chapter 7 bankruptcy.
Most people who file chapter 7 bankruptcy in Dayton Ohio will keep all their property. If the proper steps are taken after filing the bankruptcy case, rebuilding credit can be accomplished in only a few years after filing.
We service the following cities and communities outside and inside of Dayton, Ohio.
New Carlisle, Oh
Woodbourne-Hyde Park, Oh