Bankruptcy is a legal process allowing an individual or business to have some or all of their debt excused. It is almost always considered as a last resort because it can have some negative long-term consequences which must be considered, even if you eventually decide that they are outweighed by the benefits. Bankruptcy is controlled by federal law and handled in federal courts, so the procedural and substantive rules involved in Ohio are often the identical as everywhere else in the U.S. However, individual bankruptcy courts have slightly different rules for items such as exemptions, so it would be a good idea to consult with a local Shaker Heights, Ohio bankruptcy attorney beforehand.
Chapter 7 Bankruptcy in Shaker Heights, Ohio
There are 2 typical types of consumer bankruptcy in Shaker Heights, Ohio: Chapter 7 and 13. Chapter 7 liquidates part of the debtor's assets. It requires a certain percentage of the debtor's assets to be sold off to pay as much of his or her debt as possible. However, many forms of property that most people own are exempt, meaning that they don't need to be sold. This often includes houses, vehicles, insurance policies, and necessary personal items, like clothing. These assets are not available to creditors.
Once appropriate assets are sold, and the money turned over to the creditors, most remaining debt is excused. However, there are certain types of debt that cannot be excused in bankruptcy, including student loans, taxes, child support, and criminal fines. If most of your debt is non-dischargeable, it may not be a good idea to file for bankruptcy in Shaker Heights, Ohio.
Chapter 13 Bankruptcy in Shaker Heights, Ohio
In Shaker Heights, Ohio, Chapter 13 is substantially different from Chapter 7. Chapter 13 may or may not be the best choice for you; this depends on the facts of your specific situation. Chapter 13 bankruptcy does not discharge debt. Instead, it restructures it. This involves the bankruptcy court coming up with a new payment plan that supersedes the terms of the arrangements that gave rise to the debt in the first place. This results in an adjusted payment plan that the debtor should find manageable, if he or she can make a few sacrifices.
Which Type of Consumer Bankruptcy Should I File in Shaker Heights, Ohio
Whether Chapter 7 or Chapter 13 is the right choice for you depends heavily on your distinct situation. If you have a stable income stream, and a lot of non-exempt property, Chapter 13 might be right for you. If you don't have a stable income, and most of your property is exempt, Chapter 7 might be a better way to go.
Whatever your situation, you should speak with a local Shaker Heights, Ohio bankruptcy lawyer. Your attorney will be able to advise you of your options and their likely results, which will help you make a more educated decision.