If your financial situation has reached a point where you don’t think you’ll ever get out of debt, it may be time to consider relief under the US Bankruptcy Code. Statistics indicate you’re not alone, as 772,646 individuals and businesses filed for bankruptcy in 2019. There are plenty of others that share your desire to gain control over your finances, ease your debt, and make a fresh start.
Still, it’s understandable that you might be intimidated by the bankruptcy process. Taking legal action, especially one that has consequences for your future can seem overwhelming. Your concerns are likely alleviated when you consider the alternative: Remaining under crushing debt, incurring exorbitant late charges and interest, creditor harassment, and never even coming close to paying down your balances. While you should discuss the specifics with an Ohio bankruptcy attorney, here are a few facts you need to know about the process.
There Are Multiple Types of Bankruptcy to Consider
Based upon your situation and strict eligibility rules imposed by federal law, you might consider one of three forms of bankruptcy:
- Chapter 7: Individuals and businesses may qualify to file bankruptcy under Chapter 7, in which the court’s trustee sells some of your property and applies it to your debts. The end result is that you emerge debt-free.
- Chapter 13: This form of bankruptcy involves paying down your debt to creditors over time since you’ll work with the court to develop a repayment plan. A typical repayment plan is 3-5 years in duration, but your debt is wiped out at the conclusion of the process.
- Chapter 11: If you own a business and are in debt, you might opt for Chapter 11. The process is similar to Chapter 13, so you’ll work out a repayment plan to reimburse creditors.
You Need to Participate in Credit Counseling Before Filing
Most filers must go through credit counseling within six months before initiating the process, and some will also need to complete a course while the case is pending. The point is to ensure bankruptcy is the right fit for your situation and to reduce the possibility that you’ll have to file a second time down the road.
Filing for Bankruptcy Triggers an Automatic Stay on Collection
One of the primary advantages of initiating bankruptcy proceedings is that the court immediately imposes a stay on creditor efforts to collect on your debt. They cannot contact you, garnish your wages, place a lien on the property, or engage in any other prohibited conduct.
A Toledo, OH Bankruptcy Lawyer Can Help You Navigate the Process
This overview of bankruptcy basics may be helpful, but it should also convince you of the importance of retaining knowledgeable legal counsel to assist with the process. To learn more about how we can help, please contact Groth & Associates. You can set up a consultation by calling 419.482.1176 or visiting our website. Once we review your circumstances, our attorneys can advise you on your options and strategies for the bankruptcy process.