Most people in Ohio are feeling the pinch of the economic crisis less than most states, but personal bankruptcies are still being filed more than the national average. Since a large portion of the average person’s debt is due to student loans, which is typically not covered in a Chapter 7 or Chapter 13 bankruptcy, this is rather perplexing.
Debt Situation in Ohio
Ohioans are about average when it comes to their debt burden compared to other states, and the average credit score per person is a respectable 650. Ohio debt relief is still needed, however, mostly due to student loans and credit card debt.
The average Ohioan is $35,200 in debt, lower than the national average of $47,500, but still, that’s no small change. This includes mortgage and non-mortgage debt. Credit card debt is typically 17% of a household’s annual income, while student loans amount to an average of $27,713 per graduate.
Overall, Ohio residents have relatively stable financial health. For those who find their debts to be overwhelming, however, Ohio debt relief comes in the form of personal bankruptcies.
What are Personal Bankruptcies?
There are two types of bankruptcies that an individual can file. The first is Chapter 7, which is also referred to as liquidation because it involves the selling of non-exempt assets and property to pay off a portion of outstanding debt. To qualify for Chapter 7, the filer must have an income below the median wage in the state, or pass a means test which will indicate the inability of the debtor to pay off debts. Usually, a large portion of the debt is forgiven and the debtor can start fresh.
The second type is Chapter 13, which is also referred to as resettlement, because it is a court-mandated scheduling of debt payments based on the ability and capacity of a debtor to pay. No debt is forgiven, although there is a cap for the amount of annual interest a creditor may legally impose on outstanding amounts.
Bankruptcy as Ohio Debt Relief
In 2005, for every 66 Ohio residents in debt, one filed for personal bankruptcy. This is twice is high than the national average for the same year. The incidence rate has since dropped considerably, but it is still an option that many Ohioans have no problem considering. For student loans to be forgiven in a bankruptcy, however, very specific conditions have to be met. Bankruptcy lawyers would be able to advise a filer about this, as well how to best handle a bankruptcy so that the cost is not too excessive.
When you have overwhelming and burdensome financial issues, bankruptcy may become an extremely tempting option. In considering the many different options you have for paying back your debts, you may come to find that filing for Chapter 7 bankruptcy is the best option. This is generally a good choice for people looking to get their debts wiped out so that they can start anew. However, there are only certain debts that are considered dischargeable, while others are still required to be paid.
Excluding some non-dischargeable debts, a large number of your debts can be wiped out through Chapter 7 bankruptcy. Getting these debts discharged means that it is no longer legally necessary for you to pay the creditors, and they are not allowed to collect anything from you anymore. Among the most common debts that are usually discharged are:
- Credit card debt
- Past due amounts for utility bills
- Business debts
- Social security overpayments
- Balances on repossession deficiency
- Dishonored checks
- Loans from family, friends and employers
- Debts from lease agreements
- Penalties from taxes (past a set number of years)
- Revolving charge accounts (not including the extended payment charges)
- Lawyers fees (not including alimony and child support awards)
There are just some of the possible debts that can be discharged through Chapter 7 bankruptcy, but some of these can become non-dischargeable if the court determines that any of these debts are related to any fraud or misconduct. It is also important to note that aside from the debts that you acquired or built up before you filed for bankruptcy, the debts you have gained after filing your petition are still your responsibility. While filing for Chapter 7 bankruptcy may seem complicated and confusing at first, it may nevertheless be the best way out of your financial predicament.
The §341 meeting of creditors is part of the process of filing for Chapter 13 bankruptcy, so called because it refers to Title 11 Section 341 of the USC. This is convened by the assigned trustee for the purpose of bringing together the debtor and creditors in case there are any questions regarding the proposed repayment plan filed under Chapter 13 of the Bankruptcy Law and other issues. In general, creditors do not attend §341 meetings unless there are some issues regarding the legitimacy of the plan. Even then, creditors usually dispense with actually attending the meeting and simply lodge their objections with the trustee.
Prior to the scheduled meeting, the trustee will go over the documentation filed by the debtor in accordance with the requirements of the bankruptcy process. If everything is in order, a §341 meeting is scheduled between 21 and 50 days after the initial Chapter 13 bankruptcy filing, and will only be presided over by the trustee, not the judge. It typically takes about 5 minutes.
The debtor is required to bring the following, without which the meeting cannot proceed and will have to be rescheduled:
- Social Security card
- Photo identification
The trustee will pose questions to the debtor, who may have a bankruptcy lawyer in attendance. These include but not limited to the following issues:
- Accuracy of financial statements
- Civil status and dependents
- Assets and liabilities
- Other payment plans
The trustee may decide to schedule a follow up meeting if more information is needed or if there is a need for the debtor to amend some documents. In cases where objections by the creditors cannot be resolved through negotiation, a judge will have to step in.
The §341 meeting is a mere formality in most cases due to the failure of creditors to attend them. However, since it is part of the filing process for Chapter 13 bankruptcy, debtors and trustees are obliged to comply. Using the services of a Chapter 13 bankruptcy attorney, you’ll be able to understand exactly what is happening throughout your bankruptcy and will be informed about the implications of issues that arise and guided on preferred ways to handle such issues.