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Having significant debt can be overwhelming and stressful, leading to problems in many areas of your life. The thought of bankruptcy can be nerve-wracking, with many unknowns. What happens after you file? Which assets can be taken away? Will it be difficult to borrow money in the future?
While declaring bankruptcy can seem scary, it also provides a number of benefits to help you get back on your feet. Working with a Columbus bankruptcy lawyer is a great way to make the legal process as smooth as possible.
The Jump Legal law firm in Columbus, Ohio is here to guide you through the process to improve your financial future – and your life. Contact our practice for your free consultation.
What is bankruptcy?
Bankruptcy occurs when a person is unable to repay the money they owe. It’s a legal process that allows a person to legally eliminate their debts, called a discharge, or create a payment plan to partially discharge their debts.
A variety of factors contribute to a person going bankrupt, including falling behind on your house payment, your car payment unpaid medical expenses, credit card default, or student loan debt. It may be that someone has lost a job, had divorced, or expenses due to unexpected events such as natural disasters or theft.
Becoming debt-free can be tricky, but it is not impossible. When done properly, this can help give you a fresh start.
What happens when you file for bankruptcy?
Filing is often a step towards a clean financial slate and a fresh financial start. Depending on your unique financial circumstances, you will file for a specific type of bankruptcy. Two of the most common types are Chapter 7, typically for people with little income, and Chapter 13, typically for people with a steady income. The type you choose along with your circumstances will help determine which of your assets – if any – will need to be sold in order to repay the money you owe. Most assets are never sold in bankruptcy because they will be considered exempt.
Once you fill out and submit the proper legal forms required in Columbus, you’ll be granted an automatic stay. This prohibits creditors from calling or sending you letters, continuing to negatively report on your credit report, trying to collect payments from you, garnishing your wages, and going after your assets. This gives you time to work with your bankruptcy attorney to determine the next steps and a strategy to improve your financial standing.
Benefits of filing for bankruptcy
While bankruptcy will stay on your report for 7 to 10 years and may make it more difficult to borrow in the future, under the right circumstances, it also has important benefits. Most individuals are able to start borrowing money again within 6 months to a year after filing bankruptcy. For some, it may actually improve their credit score to file bankruptcy.
The automatic stay that comes with bankruptcy gives you protection against your creditors. I will stop any wage garnishment, foreclosure, or vehicle repossession. It gives you a break from pressures from creditors and allows you time to create a payment plan to pay back the money you owe.
In most cases, declaring bankruptcy is the first step to improving your credit score. In addition to preventing further negative reporting on your report, the bankruptcy discharge wipes off the debt on your report, allowing your debt-income ratio to be restored. The financial freedom that awaits you will allow you to obtain new credit sooner by improving your FICO score faster.
Filing for bankruptcy can help you eliminate card bills, medical bills, and judgments; stop garnishments, repossessions, and foreclosures; as well as reduce car payments and mortgages, depending on your circumstances and whether you file for Chapter 7 or 13 bankruptcy. Additionally, your Columbus, Ohio place of employment cannot fire you for going bankrupt. While it can feel intimidating, it’s also a great way to get a fresh start.
Working with Columbus, Ohio bankruptcy lawyers is an important step to ensuring you understand bankruptcy law as well as your options, plus the risks and benefits. Contact the Jump Legal law office in Columbus for a consultation.
Common types of bankruptcy
When you make the decision to declare bankruptcy, you will likely file for one of two main types: Chapter 7 and Chapter 13 bankruptcy.
Chapter 7 Bankruptcy
This type of bankruptcy is typically meant for people who do not have a high income and have assets with market values that are exempt. This means you will not lose any assets in Chapter 7.
How does it work?
Under Chapter 7 bankruptcy, there is no monthly repayment plan and you are able to wipe out unsecured debt like credit card debt, medical bills, and certain taxes.
This does not apply to alimony, child support, student loan debt, or some tax claims; however, you will be able to keep certain assets such as your home and your car, as well as wages earned after you file.
Whether or not you qualify will be based on your income level and hour household size. Chapter 7 bankruptcy income is measured based on your last 6 months of income. This income must be lower than the average income for the same sized household.
Benefits of Chapter 7 Bankruptcy
While you may have to liquidate some of your property, assets such as your house, your vehicle, your retirement, and your college fund are exempt. You can eliminate card and medical bills as well as judgments, and stop wage garnishments, repossession, and foreclosure.
Chapter 13 Bankruptcy
This type of bankruptcy is typically meant for people with a steady income above the average household size and does not include the liquidation of property.
How does it work?
Chapter 13 bankruptcy allows you to reorganize your debt and catch up on the missed car and house payments while allowing you to keep your assets.
You will have a monthly payment plan that is based on your family’s income and expenses over a period of 3-5 years. This does not mean that you will have to pay back all of the money you owe; you may only pay back a small percentage of what you owe, enabling you to more easily become debt-free.
Chapter 13 bankruptcy is often used by individuals who have too high of an income level to qualify for Chapter 7.
Benefits of Chapter 13 Bankruptcy
It allows you to keep your belongings and reorganize your debt so you end up paying back less than what you currently owe. It can help you modify your car loan and lower your monthly payments, as well as potentially eliminate a second mortgage. It also reduces housing costs and helps you build equity in the future.
The filing process
Before you file for bankruptcy, it’s important to meet with a Columbus bankruptcy lawyer to discuss your financial situation and determine which type to file. They’ll help you understand the law, tell you what to expect after you file, and assist you through the process.
Before you can file, you’re required to take an online credit counseling session. During this session, the counselor will discuss the advantages and disadvantages of bankruptcy, provide alternative solutions, and discuss your budget.
Once you’ve completed the pre-bankruptcy counseling and decided along with your attorney that filing is the right decision for you and your financial future, and know which type of bankruptcy you will be filing for, your bankruptcy will be filed. With the help of your Columbus, Ohio bankruptcy attorney, you will fill out and submit the proper legal forms and file a petition with the bankruptcy court. All bankruptcy cases are dealt with in a federal court.
After filing, your automatic stay is implemented and your assets and income will be protected. If you continue to receive calls and pressure to pay while the stay is in place, contact your Columbus, Ohio attorney for assistance.
You will have a very simple court hearing, called a 341 Meeting of Creditors, within 30 days of filing. Your debts will typically be discharged a few months following this court hearing.
If you choose Chapter 13, you will create a payment plan to help you pay back some of the money you owe. You will make payments each month to a Trustee and they will pay your creditors pursuant to a payment plan approved by the court once the payment plan has been approved, it will usually be in effect for about 3 to 5 years. During this time, you’ll be protected from garnishments, lawsuits, and more. Once you have completed the required payments outlined in the plan, your debts will be discharged.
For liquidation as well as reorganization, you must also take a debtor education course in order for your debt to be discharged. After bankruptcy, it’s important to make any required payments in a timely manner.
How Jump Legal Can Help
If you’re facing difficult financial decisions, contact the law offices of Jump Legal law firm. The bankruptcy attorneys at our Columbus, Ohio practice are here to help you change your financial future and your life. We’ll discuss your situation and concerns while keeping all communication confidential. We’ll explain the legal process, create a plan based on your unique circumstances, and aid you throughout the entire bankruptcy process. There are no hidden costs when working with Jump Legal – we’ll quote all fees upfront so you know what to expect.
Schedule your free consultation
You can’t change your financial future until you start the process. Contact our Columbus, Ohio law offices today to schedule your free consultation with a Jump Legal law firm bankruptcy attorney.