Bankruptcy is a legal process allowing an individual or business to have some or all of their debt discharged. 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 Warrensville Heights, Ohio bankruptcy attorney beforehand.
Chapter 7 Bankruptcy in Warrensville Heights, Ohio
There are 2 common types of consumer bankruptcy in Warrensville 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 essential personal items, like clothing. These assets are not available to creditors.
Once the eligible property is sold, and the funds transferred to the creditors, the dischargeable debt is excused. Some forms of debt, however, can't be discharged in Chapter 7 Bankruptcy in Warrensville Heights, Ohio. These include student loans, criminal fines, and taxes, among others. If most of your debt can't be discharged, Chapter 7 may not be the best choice for you.
Chapter 13 Bankruptcy in Warrensville Heights, Ohio
In Warrensville Heights, Ohio, chapter 13 is extremely different from Chapter 7, and may or may not be the best option for you, depending on your situation. Chapter 13 Bankruptcy involves a court setting up a revised payment plan, which allows the debtor to pay off most or all of his debts over a longer period of time, through monthly payments that should, assuming that the debtor is willing to make a few sacrifices, be manageable.
Which Type of Consumer Bankruptcy Should I File in Warrensville Heights, Ohio
The answer to this question depends strongly on your individual situation. If you have enough stable income to manage a payment plan, and a lot of non-exempt property that you are unwilling to part with, Chapter 13 may be a good option. If you don't have much stable income, and most of your property is exempt, Chapter 7 might be better.
Whatever your situation, you should speak with a local Warrensville Heights, Ohio bankruptcy lawyer. Your attorney will be able to advise you of your options and their likely consequences, which will help you make a more educated decision.