When facing burdensome amounts of debt, bankruptcy can provide a reset button, and the ability to start over with a clean financial slate. We make that process as quick, easy, and painless as possible. Our staff will review the necessary paperwork, guide you through each step of the process, and shepherd your case to completion from filing to the conclusion of the case. Our firm currently concentrates on its Chapter 7 practice, and can explain the various options that you may have to eliminate or restructure debt.

If you are struggling with significant financial challenges and are looking to explore your options to eliminate debt, feel free to call our attorneys. We can explore whether filing to discharge your debts may be an excellent fit for your situation.  

People who encounter financial difficulties and are unable to pay existing debts often file for bankruptcy. This, in a way, can help them financially restart. Federal law protects your legal right to declare bankruptcy. However, bankruptcy can be a complicated ordeal, and its consequences are serious.

To help demystify the process, we’ve put together a list of questions often asked by our clients.

What is Bankruptcy?

Bankruptcy is a legal process a person who cannot pay their bills can use to eliminate their obligation to pay back some or all of their debts. Opening a case can immediately stop creditors from seeking to collect debts.

However, there are some limitations to what declaring bankruptcy can do. It will not eliminate debts to “secured” creditors. Examples of secured loans would be home mortgages, or cars, where the loan is “secured” by the right to reclaim the car or the home if you fail to pay . Child support, spousal support, criminal fines, and some student loans cannot be discharged. There is also little protection for cosigners on loans that are discharged in bankruptcy.

Are there Different Kinds of Bankruptcy?

In Ohio, there are four different kinds of bankruptcy an individual can file: Chapter 7, Chapter 11, Chapter 12, or Chapter 13. A person’s ability to file for each can depend on their income, debts, assets, family size, and more. Here are brief explanations of each.

  • Chapter 7: Also known as liquidation, this is what most people refer to as a financial “fresh start.” Chapter 7 erases eligible debts, and a trustee could sell (liquidate) some of your assets to pay creditors. However, most Chapter 7 cases result in finding most or all of your assets cannot be touched.
  • Chapter 13: This type of bankruptcy is called individual reorganization. It is an alternative to Chapter 7 because it allows claimants to keep their property. However, claimants must also pay back a portion of all of their debt in accordance with a special payback plan.
  • Chapter 11: This is another kind of reorganization used by individuals and businesses whose debts exceed the limits on Chapter 13. The process is very expensive, and is not often used by individuals.
  • Chapter 12: This is a special kind of bankruptcy available for family farmers. To qualify for Chapter 12 bankruptcy, a person must earn most of their income through family farming operations.

What Happens to my Credit Score When I File for Bankruptcy?

Filing for bankruptcy can significantly affect a person’s credit score. If you may need credit for a major purchase in the near future, it’s important to think carefully about this decision and seek advice. Credit reports note a filing for bankruptcy for up to 10 years.

This does not mean you cannot rebuild new credit. Generally, lenders will still provide loans to those with bankruptcy on their credit reports. At times, some people experience difficulty securing new loans, have to pay higher interest rates on loans received, or are limited in the amount of loan money they can secure after filing bankruptcy.

Can I file for Bankruptcy More than Once?

Yes, a person can file for bankruptcy more than once. However, there are limitations on the kinds of bankruptcy and time limitations on filings.

A person cannot receive a Chapter 7 “fresh start” if they have received a Chapter 7 discharge in the previous eight years, or a Chapter 13 discharge in the last six years. Likewise, a person cannot receive a Chapter 13 discharge if they received a Chapter 7 discharge in the last four years or a Chapter 13 discharge in the last two years.

If a petition was denied, it may be possible to file again and receive a discharge without any time restrictions, depending on the circumstances.

How Much Does it Cost to File for Bankruptcy?

Most clients will need a Chapter 7 bankruptcy, which should cost around $1500 or less in attorney’s fees, plus court costs. Court filing fees start at around $300. The amount that attorneys can charge is legally limited by the courts. If you need to file a different Chapter, the cost of filing can vary substantially based on their attorney’s fees, how extensive and complex the debts are, and other factors. For many clients, expending $1500 to wipe out tens of thousands of dollars in high-interest credit card fees can be an extremely powerful tool to eliminate burdensome debt.

How Do I file for Bankruptcy?

The first step is to file a petition in federal court. The petition must include a list of the claimant’s assets, their outstanding amount of debts owed to creditors, and other personal information about employment and finances.

The Court will appoint a trustee, who will schedule a hearing. The claimant’s creditors can attend. Here, the trustee will check all documents for accuracy and ask questions to determine if granting the petition is appropriate.

Can My Bankruptcy Petition be Denied?

Yes, a petition for bankruptcy can be denied.

A petition for bankruptcy can be denied for misconduct before or after filing the petition, like destroying or concealing financial records or assets. Lying under oath can also cause a court to deny your petition. And Chapter 7 filings cannot discharge all types of debts.

If you are considering filing for bankruptcy and have questions or concerns, contact the McCleery Law Firm. Our experienced team is ready to offer helpful advice throughout the process.