Bankruptcy in Ohio, Part 2
Bankruptcy Court is your friend, unless you're running a scam
Continued from Bankruptcy in Ohio, Part 1.
Bankruptcy & The Constitution
In the USA, we long ago recognized the folly of sending people to debtors prison, where they could no longer service any debt at all and were removed both from the economy and the tax base.
In fact, bankruptcy is in Section 8 of the Constitution, listed among the several powers that Congress shall have (namely): To establish a uniform rule of naturalization, and uniform laws on the subject of bankruptcies throughout the United States. . .
The powerful protection of the Bankruptcy Code
In other words, we, the people, have not yet been recognized as being too big to failbut every individual (and business) is recognized as too important to jail. That recognition has led to the codification of the federal bankruptcy laws contained in Title 11 of the United States Code. Known collectively as the Bankruptcy Code (or, simply, the code), together these statutes provide a powerful tool against harassment by creditors and illegal collection practices. Immediately upon filing, for example, creditors are ruled by an automatic stay from the U.S. Bankruptcy Court. This stay prevents them from contacting you anymore (i.e., ends creditor harassment) and says they must now work through the federally mandated procedures within the Bankruptcy Code.
Once the petition is filed, most creditors are forced to shut up, stand down
That, alone, is often cited by debtors as a great relief as they get on about their lives and the business of starting over. Despite many myths about bankruptcyoften perpetuated by the same credit-card industry that pushed so hard for the so-called Bankruptcy Reform Act of 2005 that made it tougher to file for bankruptcy protectionthose who fulfill the courts obligations and obtain their bankruptcy discharge often find their finances and credit in much better shape than they were before filing.
The bankruptcy courts in Ohio
Ohio has two, federal bankruptcy courts, serving the indicated divisions:
- United States Bankruptcy Court, Northern District of Ohio
- United States Bankruptcy Court, Southern District of Ohio
Southern District's warning about filing pro se
Corporations and partnerships must have an attorney to file a bankruptcy case. Individuals, however, may represent themselves in bankruptcy court. While individuals can file a bankruptcy case without an attorney or "pro se," it is extremely difficult to do it successfully.
It is very important that a bankruptcy case be filed and handled correctly. The rules are very technical, and a misstep may affect a debtor's rights. For example, a debtor whose case is dismissed for failure to file a required document, such as a credit counseling certificate, may lose the right to file another case or lose protections in a later case, including the benefit of the automatic stay. Bankruptcy has long-term financial and legal consequences -- hiring a competent attorney is strongly recommended.
Debtors must list all property and debts in their bankruptcy schedules. If a debt is not listed, it is possible the debt will not be discharged. (Lists of the documents [including schedules] that debtors must file are set out on Form B200 (pdf), one of the Director's Procedural Forms.) The judge can also deny the discharge of all debts if a debtor does something dishonest in connection with the bankruptcy case, such as destroying or hiding property, falsifying records, or lying. Individual bankruptcy cases are randomly audited to determine the accuracy, truthfulness, and completeness of the information that the debtor is required to provide. Please be aware that bankruptcy fraud is a crime.
Next, in Bankruptcy in Ohio, Part 3: BAPCPA, the means test, safe-harbor provisions.
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