Mortgage lawyer, How they can guide you when you want to file for bankruptcy

If you are running your own business, it is important that you prepare a bankruptcy plan from before hand. But most of the business owners try to avoid making it for some particular reason. No business person would like to go for bankruptcy but if such

situation arises, then avoiding it or proving it to be wrong can cost you pay much more. The business owners need to do proper research when they want to prepare for bankruptcy or go for mortgage modification. But, it is a much better decision to hire a mortgage lawyer who can assist you in preparing for bankruptcy and also save your precious time. These mortgage lawyers with their years of experience will be able to do your work in much less time than you would have taken if you do it on your own.

You may do all the research work on your own when you want to prepare for bankruptcy or take the help of a mortgage lawyer though most of the business owners don’t want to choose this option. A mortgage lawyer can help you deal with this matter in a much better way. You need to have at least some experience in order to prepare for bankruptcy.

Many people find no other alternative than filing for bankruptcy when they mount up lot of debts and do not find any option to repay them. Before filing for bankruptcy, it is important that you decide which type of bankruptcy you may qualify for and then take the necessary steps for it.

  • You may have assets such as home or property. It is better to opt for Chapter 13 bankruptcy in this situation since it enables you to maintain your assets and, at the same time, pay your creditors as per the repayment plan granted by the court.
  • It is important to check your income when you want to file for bankruptcy. If you are doing a full-time job and earn a fixed income, then you may not qualify for Chapter 7 bankruptcy.
  • You may have taken out your business loan along with your business partner. Your business partner will be equally responsible to pay off the business loan in case you file for Chapter 7 bankruptcy.
  • You may pile up all your financial records such as your pay slips which indicate your fixed income for the last 6 months, your loan statements, tax returns and any letter that you may have got from your creditors.
  • You may take the help of a mortgage attorney to know which type of bankruptcy is most suitable for you.
  • Lastly, keep on paying your debts that will stay after you file for bankruptcy. Your bankruptcy attorney will enable you to understand which debts you’ll have to repay and which debts you will be released off.

The advantage of taking the help of a mortgage lawyer to prepare for bankruptcy is that they are aware of all the different options available for business. The business owners find it very difficult to understand whether or not it is a chapter 7 bankruptcy or chapter 13 bankruptcy. But these business owners have to run their business smoothly and get their work done. In this situation, the business owners can take the help of mortgage lawyers in order to understand which needs have to be fulfilled. You may opt for mortgage modification so that your mortgage lender agrees to alter the terms and conditions of the loan thus making it affordable for you to pay off the loan. This, in turn, will help you save your business. So, it is better that you ask your lawyer for mortgage modification. The loan modification lawyers can help the business owners get their loan modified since they have years of experience in dealing with these matters.

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Bankruptcy in North Carolina, Part 4

Some debt can not be discharged

Note: Continued from “Bankruptcy in North Carolina, Part 3.”

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Points to keep in mind

As we finish the series about Bankruptcy in North Carolina, keep these major points in mind:

  • Even if you drove your own private, financial wagon off the cliff, it’s part and parcel of the USA code of conduct that, having realized your mistakes, you get a chance to start over.
  • That being said, if you’re really a schemer and a scammer, the trustee is empowered by the Bankruptcy Court and the Bankruptcy Code to bring you to justice.
  • However, most people are neither schemers nor scammers. That’s why we have the very powerful protection of The Constitution, which gives Congress the authority to regulate bankruptcy.

That being said, following is more to keep in mind.

Some debt can not be discharged

Some debt simply can not be discharged, regardless of the chapter of the code under which the petition is filed. That being said, Chapter 13 is less restrictive than other chapters available to individuals. The good news is the debt does not have to be addressed until after the discharge; however, this happens quickly in a Chapter 7 case, comparatively speaking–within a few months after the original petition is filed. Compared to Chapter 13, often referred to as the “wage earner’s plan,” the few months’ wait fairly flies by–Chapter 13 cases are set up on either a three-year or five-year schedule.

According to the U.S. Court’s page on discharges, “There are 19 categories of debt excepted from discharge under chapters 7, 11, and 12. A more limited list of exceptions applies to cases under chapter 13.” The court also explains that “A slightly broader discharge of debts is available to a debtor in a chapter 13 case than in a chapter 7 case. Debts dischargable in a chapter 13, but not in chapter 7, include debts for willful and malicious injury to property, debts incurred to pay non-dischargable tax obligations, and debts arising from property settlements in divorce or separation proceedings. Although a chapter 13 debtor generally receives a discharge only after completing all payments required by the court-approved (i.e., “confirmed”) repayment plan, there are some limited circumstances under which the debtor may request the court to grant a “hardship discharge” even though the debtor has failed to complete plan payments. Such a discharge is available only to a debtor whose failure to complete plan payments is due to circumstances beyond the debtor’s control.”

Advantages of Chapter 13 over Chapter 7

As I’ve written before (these criteria don’t vary from state to state, generally speaking):

In addition to the benefits of Chapter 7, you can:

  • keep property that is secured by a contract by paying for it through the Chapter 13 plan. This can save a home from foreclosure, or stop repossession of a car;
  • stop evictions, if filed before the 5 day notice or other lease termination expires and if you can pay the back rent owed through the Chapter 13 plan. If you cannot repay all of your debts, but have made the best effort to pay that you can, you can get a discharge of the balance left on your debts, although you cannot remove a lien unless you have paid it off through the plan;
  • discharge all debts, except alimony, child support, criminal fines and restitution, damages to individuals caused by drunk driving or intentional torts, money owed due to fraud, theft or embezzlement, most taxes and long term debts, such as mortgages. Student loans are not discharged unless denying a discharge would cause an undue hardship to the debtor.

Special rules for Chapter 13

If you fall behind on your payments, the payments can be deducted directly from your paycheck. While you are in Chapter 13 you cannot get new credit without the trustee’s approval.

There are also limits the the amount of debt you can have and still be eligible for Chapter 13.  A debtor cannot have secured debts over $1,081,400 or unsecured debts over $360,475. However, Chapter 11 is available for debtors who exceed these limits–Chapter 11 is not restricted to business bankruptcies. If you need Chapter 11 protection, you really, really need a good bankruptcy attorney.

Consider free case evaluation

We can help: If you’re interested in learning more about the power of bankruptcy protection, please, browse our site for more information; if you need help filing for bankruptcy protection for yourself, consider signing up for a free case evaluation.

Bankruptcy in North Carolina, Part 3

BAPCPA, ‘means test,’ safe-harbor provisions

Continued from “Bankruptcy in North Carolina, Part 2.”

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Effects of BAPCPA, the ‘reform’ act of 2005

Under intense pressure from credit-card companies (and the banks that own them) and their lobbyists for about five years of hard-corner, back-room negotiations, Congress passed BAPCPA, designed to make it more difficult for consumers to file for bankruptcy protection. The idea was to make it tougher for individuals to file Chapter 7 (so-called “liquidation bankruptcy”), steering them toward Chapter 13 (so-called “reorganization bankruptcy” or the “wage-earner” plan).

Trustees and the ‘means test’

According to the Justice Department’s BAPCPA page, the act gave “the U.S. Trustee Program new responsibilities in a number of areas, including:

  • implementing the new “means test” to determine whether a debtor is eligible for chapter 7 (liquidation) or must file under chapter 13 (wage-earner repayment plan);
  • supervising random audits and targeted audits to determine whether a chapter 7 debtor’s bankruptcy documents are accurate;
  • certifying entities to provide the credit counseling that an individual must receive before filing bankruptcy;
  • certifying entities to provide the financial education that an individual must receive before discharging debts; and
  • conducting enhanced oversight in small business chapter 11 reorganization cases.”

Median income vs. finding of abuse

The trustee is now charged with more areas of ensuring the accuracy of filings and the determinations made under the means test and the disposable income test.

Before BAPCPA, income had no bearing on eligibility for Chapter 7. What comes into play now is the state’s median income, as determined by the Census Bureau (see North Carolina QuickFacts, Census Bureau). Basically, if your household income is higher than the North Carolina median income, you must satisfy the criteria of the means test in order to file under Chapter 7. This also puts you in the category of being subject to provisions against “abuse” of the bankruptcy code, whereas pre-BAPCPA law was framed in terms of “substantial abuse.” If abuse is found–subject to an appeal hearing–the Chapter 7 case can be dismissed (thereby exposing you once again to creditors) or converted to a Chapter 13 (or Chapter 11) filing.

Safe-harbor provisions, IRS criteria

If your household income (also relative to number of dependents) is below the median for North Carolina, you have what is known as “safe harbor” from the abuse provisions and allows you to file under either Chapter 7 or Chapter 13. A sidenote: although Chapter 11 is commonly perceived as restricted to business reorganization, individuals with unsecured debt more than $336,900 are not eligible for Chapter 13 but can file under the more expensive–and more flexible–Chapter 11.) The means test uses the IRS national and local collection standards for determining household and living expenses.

Typically, a Chapter 7 bankruptcy turns out to be a “no asset” or “low asset” filing. In such cases, there’s simply not enough “stuff” for the trustee to sell (“liquidate”), and so the case proceeds onto discharge within a few months, usually about three or four. Also, in rare cases, a Chapter 7 filing can also help a debtor keep the home. Again, this varies from state to state, and is another reason to consult with an experienced bankruptcy attorney who’s not only familiar with the code but also with the asset exemptions in Indiana–plus the ins and outs of the various judges in the North Carolina district courts.

Next, Bankruptcy in North Carolina, Part 4.

Consider your free case evaluation

We can help: If you’re interested in learning more about the power of bankruptcy protection, please, browse our site for more information; if you need help filing for bankruptcy protection for yourself, consider signing up for a free case evaluation.

Bankruptcy in North Carolina, Part 2

Bankruptcy is in the U.S. Constitution

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Bankruptcy & The Constitution

In the USA, we long ago recognized the folly of sending people to debtor’s 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 fail”–but 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 bankruptcy–often 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 protection–those who fulfill the court’s 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 North Carolina

N. Carolina has three, federal bankruptcy courts, covering the indicated divisions:

  • U.S. Bankruptcy Court, Eastern District (for counties within each division, click here)–
    • Fayetteville
    • Greenville
    • New Bern
    • Raleigh
    • Wilmington
    • Wilson
  • U.S. Bankruptcy Court, Middle District (for counties within each division, click here)–
    • Durham
    • Greensboro
    • Winston-Salem
  • U.S. Bankruptcy Court, Western District (for counties within each division, click here)–
    • Charlotte
    • Asheville
    • Statesville
    • Bryson City

Warning about filing without an attorney

The Eastern District has posted the following via a link on its Web site:

WARNING

Filing Without the Assistance of An Attorney:
[Although] it is possible to file a bankruptcy case ”pro se,” that is, without the assistance of an attorney, it is extremely difficult to do so successfully. HIRING A COMPETENT ATTORNEY IS HIGHLY RECOMMENDED.  Only attorneys, AND NO ONE ELSE, can give you legal advice.

Did you know?

Although many debtors believe that they cannot afford an attorney, many attorneys will work with a debtor to accommodate the debtor’s budget.

Many attorneys also offer free consultations.

In chapter 13 cases, a majority of the attorney fees can be paid over time through the debtor’s bankruptcy estate.

A review of this court’s cases shows a higher likelihood of success in cases in which the debtor is represented by an attorney versus cases in which the debtor is pro se.

Continued in Bankruptcy in North Carolina, Part 3

Consider free case evaluation

We can help: If you’re interested in learning more about the power of bankruptcy protection, please, browse our site for more information; if you need help filing for bankruptcy protection for yourself, consider signing up for a free case evaluation.

Bankruptcy in North Carolina, Part 1

State has done better than U.S. overall, but rates nearly 10x since mid-80s

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News article points out rise in Tar Heel bankruptcies during one judge’s career

A recent article about a new bankruptcy judge in North Carolina contains a telling line about the increase in bankruptcy filings within the state since the era when the outgoing judge was seated. From a Nov. 26 piece in The Charlotte Observer:

For most of her legal career, Laura Beyer has been the law clerk for U.S. Bankruptcy Judge George Hodges.

Beyer is now taking over the bankruptcy judgeship in Charlotte held by her boss for more than two decades.

The 4th U.S. Circuit Court of Appeals in Richmond, Va., appointed Beyer to the judgeship for a 14-year term.

That’s the news lede. However, this is the telling line [emphasis added]: “In 1986, the year before Hodges was appointed to the bankruptcy judgeship, 2,293 people and corporations filed bankruptcy petitions in North Carolina’s Western District. More than 8,000 bankruptcies have been filed in the district each of the past two years.”

Recent statistics: Bankruptcy filings, U.S. vs. N. Carolina

To get an idea of recent trends, let’s compare national rates of bankruptcy filings with the number of filings in North Carorlina, according to data from the U.S. Courts; all data are from the cited year, as of Sept. 30 [Note–due to slight annual variances, data are not exact totals from year to year]:
  • In 2007, U.S. filings were 801, 269; in 2008, 1,042,993, for an increase of 30.2 per cent. During that same period, N. Carolina residents fared better, recording in the–
    • Eastern District, in 2007 — 7,703 filings; in 2008 — 8.956 filings, an increase of 16.3 per cent
    • Middle District, in 2007 — 5,907 filings; in 2008 — 6,264 filings, an increase of 6.0 per cent
    • Western District, in 2007 — 5,810 filings; in 2008 — 6,386 filings, an increase of 9.9 per cent
  • By 2009, U.S. filings were up to 1,402,816, an increase of 34.5 percent over 2008; year to year in Ohio–
    • Eastern District filings rose to 11, 326, another rise from year to year filings, 26.5 per cent
    • Middle District filings rose to 7,432, again, a rise from the preceding year, 18.6 per cent
    • Western District filings increased to 8,159, a climb of of 27.7 per cent over 2008
  • By 2010, the U.S. saw 1,596,355 filings, another jump of 13.8 per cent, while those in N. Carolina began to drop, very slightly in two districts and a less severe  rise once more, in the Western District–
    • Eastern District filings fell in 2010, to 11,176, a drop of 1.3 per cent from the elevated levels of 2009
    • Middle District filings fell to 7,397, a slight decrease of 0.5 per cent
    • Western District filings rose once more, to 8,785, a climb of 7.7 per cent from 2009
  • By September ’11, rates had fallen from the preceding year; in the U.S., 1,467,221 were filed, a decrease of 8 per cent from 2010; in N. Carolina:
    • Eastern District filings, down 7.9 per cent, to 10,288
    • Middle District filings, down 15.1 per cent, to 6,279
    • Western District filings, down 11.2 per cent, to 7,799

N. Carolina residents have fared better than many the in U.S.

Overall, then, Tar Heelers have been less distressed than the U.S. population as a whole, based on overall percentages. Nevertheless, nearly 25,000 bankruptcies had been filed in North Carolina as of Sept. 30. That’s quite a rise since Judge Hodges began hearing cases.

Next, in Bankruptcy in North Carolina, Part 2: basic concepts and protections of consumer bankruptcy.

Consider free case evaluation

We can help: If you’re interested in learning more about the power of bankruptcy protection, please, browse our site for more information; if you need help filing for bankruptcy protection for yourself, consider signing up for a free case evaluation.

Bankruptcy in Ohio, Part 5

Some debt can not be discharged

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Continued from Bankruptcy in Ohio, Part 4.

Points to keep in mind

As we finish the series about Bankruptcy in Ohio, keep these major points in mind:

  • Even if you drove your own private, financial wagon off the cliff, it’s part and parcel of the USA code of conduct that, having realized your mistakes, you get a chance to start over.
  • That being said, if you’re really a schemer and a scammer, the trustee is empowered by the Bankruptcy Court and the Bankruptcy Code to bring you to justice.
  • However, most people are neither schemers nor scammers. That’s why we have the very powerful protection of The Constitution, which gives Congress the authority to regulate bankruptcy.

That being said, following is more to keep in mind.

Some debt can not be discharged

Some debt simply can not be discharged, regardless of the chapter of the code under which the petition is filed. That being said, Chapter 13 is less restrictive than other chapters available to individuals. The good news is the debt does not have to be addressed until after the discharge; however, this happens quickly in a Chapter 7 case, comparatively speaking–within a few months after the original petition is filed. Compared to Chapter 13, often referred to as the “wage earner’s plan,” the few months’ wait fairly flies by–Chapter 13 cases are set up on either a three-year or five-year schedule.

According to the U.S. Court’s page on discharges, “There are 19 categories of debt excepted from discharge under chapters 7, 11, and 12. A more limited list of exceptions applies to cases under chapter 13.” The court also explains that “A slightly broader discharge of debts is available to a debtor in a chapter 13 case than in a chapter 7 case. Debts dischargable in a chapter 13, but not in chapter 7, include debts for willful and malicious injury to property, debts incurred to pay non-dischargable tax obligations, and debts arising from property settlements in divorce or separation proceedings. Although a chapter 13 debtor generally receives a discharge only after completing all payments required by the court-approved (i.e., “confirmed”) repayment plan, there are some limited circumstances under which the debtor may request the court to grant a “hardship discharge” even though the debtor has failed to complete plan payments. Such a discharge is available only to a debtor whose failure to complete plan payments is due to circumstances beyond the debtor’s control.”

Advantages of Chapter 13 over Chapter 7

As I’ve written before (these criteria don’t vary from state to state, generally speaking):

In addition to the benefits of Chapter 7, you can:

  • keep property that is secured by a contract by paying for it through the Chapter 13 plan. This can save a home from foreclosure, or stop repossession of a car;
  • stop evictions, if filed before the 5 day notice or other lease termination expires and if you can pay the back rent owed through the Chapter 13 plan. If you cannot repay all of your debts, but have made the best effort to pay that you can, you can get a discharge of the balance left on your debts, although you cannot remove a lien unless you have paid it off through the plan;
  • discharge all debts, except alimony, child support, criminal fines and restitution, damages to individuals caused by drunk driving or intentional torts, money owed due to fraud, theft or embezzlement, most taxes and long term debts, such as mortgages. Student loans are not discharged unless denying a discharge would cause an undue hardship to the debtor.

Special rules for Chapter 13

If you fall behind on your payments, the payments can be deducted directly from your paycheck. While you are in Chapter 13 you cannot get new credit without the trustee’s approval.

There are also limits the the amount of debt you can have and still be eligible for Chapter 13.  A debtor cannot have secured debts over $1,081,400 or unsecured debts over $360,475. However, Chapter 11 is available for debtors who exceed these limits–Chapter 11 is not restricted to business bankruptcies. If you need Chapter 11 protection, you really, really need a good bankruptcy attorney.

Consider free case evaluation

We can help: If you’re interested in learning more about the power of bankruptcy protection, please, browse our site for more information; if you need help filing for bankruptcy protection for yourself, consider signing up for a free case evaluation.

Bankruptcy in Ohio, Part 4

Ohio does not allow federal bankruptcy exemptions

mike hinshaw

Continued from Bankruptcy in Ohio, Part 3.

State versus federal exemptions

Although bankruptcy is administered by federal law, the bankruptcy code (the “Code”) allows states to opt out of federal bankruptcy exemptions and to provide their own exemptions. These exemptions are what debtors claim in order to protect certain assets necessary to their ongoing lives and effort to start over. Exemptions include such obvious items as a home, an automotive vehicle, household possessions and tools but also include such assets as insurance policies, retirement accounts, child support and jury awards.

15 states and Washington, D.C. allow claimants access to federal exemptions

Ohio is not on the list; here’s the states that allow residents to claim federal exemptions instead of only state exemptions (Please notice: even in the following states, residents can’t “mix-and-match,” that is, they must choose one or the other):

States allowing federal exemptions

  • Arkansas
  • Connecticut
  • Washington, D.C.
  • Hawaii
  • Massachusetts
  • Michigan
  • Minnesota
  • New Jersey
  • New Mexico
  • Pennsylvania
  • Rhode Island
  • South Carolina
  • Texas
  • Vermont
  • Washington, and
  • Wisconsin.

Why do I list the states that allow federal exemptions?

Living in Ohio, you may rightly wonder: What do I care about federal exemptions if I’m not allowed to claim them because of Ohio state law?

First, you may be in a position to hold off. You may be in a position to move to a new state for a job. Perhaps you move for the job and it turns out the new state has better exemptions, or it allows claiming federal exemptions. Typically, you’ll need to be in the new state for several months to a couple of years.

Planning versus dodging

In short, there’s nothing wrong with planning the timing of your bankruptcy case, as long all actions are taken in good faith and there’s no attempt to hide assets or “temporarily transfer” title to assets to family members with them giving back the assets after your discharge from bankruptcy. Bottom line: in most cases, you can’t move then right away file bankruptcy merely to dodge Ohio exemptions law.

The court takes a dim view of anyone who seems to be “dodging” the requirements.

Don’t risk dismissal or fraud charges

Remember, your access to bankruptcy protection is not guaranteed. That is, yes, anyone can file for bankruptcy protection, regardless of income, from those living in poverty to those with millions in assets. However, everyone is subject to the means test (Chapter 7) or proof of assets versus liabilities and the income necessary to service a reorg/repayment plan (Chapters 13 and 11).

However, your case can be dismissed outright, leaving you exposed to all creditors. Or, worse, you can wind up facing charges of bankruptcy fraud, which can result in fines and even jail time.

These are all reasons for seeking counsel from an attorney experienced with Ohio bankruptcy courts and trained in both federal bankruptcy law as well as Ohio exemptions.

Next: Bankruptcy in Ohio, Part 5–Chapter 13 benefits over Chapter 7.

Consider free case evaluation

We can help: If you’re interested in learning more about the power of bankruptcy protection, please, browse our site for more information; if you need help filing for bankruptcy protection for yourself, consider signing up for a free case evaluation.

Bankruptcy in Ohio, Part 3

Income below state median provides ‘safe harbor’

Continued from Bankruptcy in Ohio, Part 2.

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Effects of BAPCPA, the ‘reform’ act of 2005

Under intense pressure from credit-card companies (and the banks that own them) and their lobbyists for about five years of hard-corner, back-room negotiations, Congress passed BAPCPA, designed to make it more difficult for consumers to file for bankruptcy protection. The idea was to make it tougher for individuals to file Chapter 7 (so-called “liquidation bankruptcy”), steering them toward Chapter 13 (so-called “reorganization bankruptcy” or the “wage-earner” plan).

Trustees and the ‘means test’

According to the Justice Department’s BAPCPA page, the act gave “the U.S. Trustee Program new responsibilities in a number of areas, including:

  • implementing the new “means test” to determine whether a debtor is eligible for chapter 7 (liquidation) or must file under chapter 13 (wage-earner repayment plan);
  • supervising random audits and targeted audits to determine whether a chapter 7 debtor’s bankruptcy documents are accurate;
  • certifying entities to provide the credit counseling that an individual must receive before filing bankruptcy;
  • certifying entities to provide the financial education that an individual must receive before discharging debts; and
  • conducting enhanced oversight in small business chapter 11 reorganization cases.”

Median income vs. finding of abuse

The trustee is now charged with more areas of ensuring the accuracy of filings and the determinations made under the means test and the disposable income test.

Before BAPCPA, income had no bearing on eligibility for Chapter 7. What comes into play now is the state’s median income, as determined by the Census Bureau (see Ohio QuickFacts, Census Bureau). Basically, if your household income is higher than the Ohio median income, you must satisfy the criteria of the means test in order to file under Chapter 7. This also puts you in the category of being subject to provisions against “abuse” of the bankruptcy code, whereas pre-BAPCPA law was framed in terms of “substantial abuse.” If abuse is found–subject to an appeal hearing–the Chapter 7 case can be dismissed (thereby exposing you once again to creditors) or converted to a Chapter 13 (or Chapter 11) filing.

Safe-harbor provisions, IRS criteria

If your household income (also relative to number of dependents) is below the median for Ohio, you have what is known as “safe harbor” from the abuse provisions and allows you to file under either Chapter 7 or Chapter 13. A sidenote: although Chapter 11 is commonly perceived as restricted to business reorganization, individuals with unsecured debt more than $336,900 are not eligible for Chapter 13 but can file under the more expensive–and more flexible–Chapter 11.) The means test uses the IRS national and local collection standards for determining household and living expenses.

Typically, a Chapter 7 bankruptcy turns out to be a “no asset” or “low asset” filing. In such cases, there’s simply not enough “stuff” for the trustee to sell (“liquidate”), and so the case proceeds onto discharge within a few months, usually about three or four. Also, in rare cases, a Chapter 7 filing can also help a debtor keep the home. Again, this varies from state to state, and is another reason to consult with an experienced bankruptcy attorney who’s not only familiar with the code but also with the asset exemptions in Indiana–plus the ins and outs of the various judges in the Ohio district courts.

Next, in Bankruptcy in Ohio, Part 4: Federal versus state bankruptcy exemptions.

Consider your free case evaluation

We can help: If you’re interested in learning more about the power of bankruptcy protection, please, browse our site for more information; if you need help filing for bankruptcy protection for yourself, consider signing up for a free case evaluation.

Bankruptcy in Ohio, Part 2

Bankruptcy Court is your friend, unless you’re running a scam

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Continued from Bankruptcy in Ohio, Part 1.

Bankruptcy & The Constitution

In the USA, we long ago recognized the folly of sending people to debtor’s 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 fail”–but 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 bankruptcy–often 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 protection–those who fulfill the court’s 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:

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.

Consider your free case evaluation

We can help: If you’re interested in learning more about the power of bankruptcy protection, please, browse our site for more information; if you need help filing for bankruptcy protection for yourself, consider signing up for a free case evaluation.

Bankruptcy in Ohio, Part 1

Despite improved bankruptcy rates, Ohio foreclosures could signal increase in bankruptcy filings

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Home foreclosures rose in October, although still lower than a year ago

A Nov. 10 article in the Dayton Business Journal reports that home foreclosure remains a serious problem in Ohio:

Ohio foreclosure activity rose 1.71 percent along with the rest of the nation in October, but dropped compared to a year ago, according to a new report from RealtyTrac Inc.

The Irvine, Calif.-based company said 8,691 properties in Ohio in October received a default, auction or repossession notice. While the figure is an increase from the previous month, foreclosure activity fell 34 percent from October 2010.

Foreclosure activity in the Dayton area also showed a similar pattern:

  • Butler County foreclosure activity fell 4 percent to 395 properties, down from 411 in September and up from 325 in October 2010.
  • Clark County foreclosure activity rose 41 percent to 97 properties, up from 69 in September and up from 71 in October 2010.

The article also lists totals for other counties.

Banks’ settlement talks with Attorneys General may proceed without California

Ohio is not one of the dissenting states in the negotiations among the states’ attorneys general, the federal government and the five largest banks. The state AGs in Calfornia, Delaware, Massachusetts, Nevada and New York have all raised serious concerns about the proposed settlement, and according to a Nov. 23 piece in The Wall Street Journal, regulators and banks are prepared to move ahead with a settlement that does not include California.

The delays in bringing banks to task, in light of ongoing foreclosures, indicates that for many homeowners filing for the bankruptcy protection of Chapter 13 remains the most practical method of saving a home. (For debtors whose debt amount exceeds a certain limit, Chapter 11 would have to be used; Chapter 7 is rarely used to save a home from foreclosure.)

Bankruptcy filings, U.S. versus Ohio

To get an idea of recent trends, let’s compare national rates of bankruptcy filings with the number of filings in Ohio, according to data from the U.S. Courts; all data are from the cited year, as of Sept. 30 [Note–due to slight annual variances, data are not exact totals from year to year]:

  • In 2007, U.S. filings were 801,269; in 2008, 1,042,993, for an increase of 30.2 per cent. During that same period, Ohio residents fared better, recording in the–
    • Northern District, in 2007, 26,417 filings and 29,060 in 2008, for an increase of 10.0 per cent;
    • Southern District, in 2007, 22,110 filings and 25,578 in 2008, for an increase of 15.7 per cent;
  • By 2009, U.S. filings were up to 1,402,816, an increase of 34.5 percent over 2008; year to year in Ohio–
    • Northern District filings rose to 37,595, an increase of 29.4 per cent from 2008, an increase of 29.4 per cent;
    • Southern District filings climbed to 32,020, a bump of 25.2 per cent;
  • By 2010, the U.S. saw 1,596,355 filings, another jump of 13.8 per cent, while in Ohio rose once more (although less severely)–
    • Northern District reached 38,902, or 3.5 per cent from the preceding year, and
    • Southern District recorded 33,605, for another increase of 5.0 per cent.
  • By Sept. ’11, rates had fallen from the preceding year; in the U.S., 1,467,221 were filed, a decrease of 8 per cent from 2010; In Ohio:
    • Northern District filings were 32,413, a decrease of 16.7 per cent from 2010, and
    • Southern District levels dropped to 28,950, a drop from 2010 of 13.9 per cent.

Ohio’s increases were less than in U.S., decreases were greater

Overall, then, Ohio residents have been less distressed than the U.S. population as a whole, based on overall percentages. Nevertheless, more than 60,000 bankruptcies were filed in Ohio as of Sept. 30. If foreclosures maintain a rising trend, bankruptcy rates may begin to rise again.

Next, in Bankruptcy in Ohio, Part 2: basic concepts and protections of consumer bankruptcy.

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