In Xenia, Ohio, bankruptcy is a judicial process in which the debts of a person or business can be absolved or restructured. This allows the debtor to climb out of a financial hole, and move on with a clean slate, which is sometimes more economically proficient than requiring the debtor to pay off everything they owe. However, bankruptcy is not a free ride, allowing someone who simply doesn't feel like paying their debts to get out of that legal obligation. It is designed to prevent debt which has little chance of ever being paid back from ruining the life and finances of the debtor. It also carries significant long-term consequences, which must be carefully weighed against the potential benefits. For example, bankruptcy makes it very difficult for the debtor to obtain credit in the near future.
Accordingly, you should speak with a good Xenia, Ohio bankruptcy lawyer. Your Xenia bankruptcy lawyer can inform you of the costs and benefits of filing for bankruptcy, and give his or her professional opinion as to whether or not it's a good option, given your particular circumstances.
Types of Bankruptcy in Xenia, Ohio
In Xenia, Ohio, there are 3 types of bankruptcy in common use: Chapter 7, Chapter 13, and Chapter 11. Because bankruptcy is a creation of federal law, the procedures governing bankruptcy in Xenia, Ohio will be similar anywhere else in the U.S. Chapter 7 bankruptcy involves liquidation of many of the debtor's assets in order to pay off as much of the debt as possible. This sounds harsh, but there is an upside: once the liquidation is complete, the debts are legally viewed as having been paid in full, whether or not the full amount was covered by the liquidation. Liquidation involves selling some personal property, and using the proceeds to pay off debt. Many types of property are exempt from liqudiation, and therefore may not need to be sold. They include homes, cars, and insurance policies, among others. You should know that some types of debt cannot be discharged in Chapter 7 bankruptcy, including taxes, student loans, and child support.
Under Chapter 13 bankruptcy in Xenia, most of the debtor's debt is not discharged. Instead, the bankruptcy court, working with the debtor and participating creditors, work out a payment plan that allows the debtor to pay off most of his or her debts over a longer period of time, thereby theoretically making the debt far more manageable. Once a payment plan is approved by the court, creditors are prohibited from attempting to collect payment under their original agreements that gave rise to the debt in the first place. Chapter 11 bankruptcy is almost exclusively used by businesses, but there is nothing that legally prevents it from being used by individuals, and its use by individuals is very rare. Chapter 11 bankruptcy requires the debtor to come up with a restructuring plan - telling the court how they propose to cut costs, improve their operations, and pay down their debts. The plan has to be approved by a majority vote of participating creditors.
One advantage of Chapter 11 bankruptcy is that it allows a business going through it to continue operations, and to trade its stock.
How Can a Xenia Bankruptcy Lawyer Help?
The need to weigh all the options and consider the costs and benefits of filing for bankruptcy in Xenia cannot be overstated. If you are considering filing for bankruptcy, it would be a good idea to speak with a Xenia bankruptcy attorney beforehand.