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Cincinnati Bankruptcy Legal Blog

Chapter 7 and the creditor’s meeting

Chapter 7 bankruptcy is often the easiest type of bankruptcy to qualify for, but this does not mean the process itself is simple. Those who pursue debt relief under Chapter 7 face a number of consequences and requirements, including subjecting themselves to a creditors's meeting in the initial phases of the process. For some debtors, this meeting can carry great emotional impact and be difficult to withstand. It is sometimes helpful to remember that all the individuals involved in a bankruptcy have responsibility to remain professional and avoid personal attacks.

When a debtor makes it through the first steps in the process of filing for a Chapter 7, he or she must then submit to a creditors' meeting. In many cases, the creditors' meeting is the sole time that a debtor must appear in a courtroom. During the meeting, creditors consider the nature of the debt that the bankruptcy aims to discharge, as well as assess the property available in the liquidation. If a trustee determines that a person pursuing Chapter 7 has nonexempt property not yet liquidated, the trustee may order the debtor to surrender it, unless it is of little value or would prove too difficult to sell.

Discharging personal tax debt under Chapter 7

If you owe personal taxes that you cannot feasibly pay, you may qualify to discharge some or all of that debt through a Chapter 7 bankruptcy. However, like all things involving federal taxes, there are a number of very strict standards you must meet. While meeting these standards and qualifying for a Chapter 7 discharge is not simple or easy, it is a possible avenue of relief, and every option is important to consider.

In order to qualify for a discharge of tax debt through Chapter 7, a debtor must

  • Oonly attempt to discharge personal tax debt
  • File a legitimate tax return for the years in which the tax debt accrued at least two years before filing for bankruptcy
  • File for relief from a tax debt at least three years old
  • Be eligible to file for relief at least 240 days after the Internal Revenue Services assessed the tax debt

Recognizing a need for bankruptcy and solution options

Do you ever think back to when your Ohio business was just a dream? If so, you might recall the various challenges you encountered and overcame to bring that dream to fruition. It's hard to believe more than a decade has gone by. Like many people who built their own businesses from the ground up, you wouldn't change a thing. All the long hours, hard work and trial and error through learning experiences paid off and you enjoyed years of continued success.

Now, you're in a different season in life that includes financial problems. You're definitely not the only business owner facing hard times in an unstable economy. You'd likely be hard pressed to find a business owner who hasn't experienced financial trouble at some point. It may help to not focus so much on the fact that a financial crisis exists as to what types of options can help get things back on track. For you and many others, the answer may lie in one of various forms of bankruptcy.

When should I file for bankruptcy?

Bankruptcy is a very useful form of financial relief for many different borrowers, and it is finally receiving more recognition as a normal part of doing business and living as a consumer in America. Under the protection of bankruptcy law, overextended debtors can discharge significant portions of their debt in return for restrictions on future financial privileges for a set amount of time.

As more businesses and individuals consider the opportunities that bankruptcy affords, many do not know when it is really the best time to file. This is a complicated question that requires insight from a bankruptcy law professional. No matter where a debtor is in the process of getting their financial lives back on track, it is always the right time to research options.

Benefits of filing bankruptcy before divorce

When hard times arrive on your doorstep, they may not be alone. Often, a person considering a bankruptcy is also on the verge of divorce, for instance. You can ask any mental health professional and they will almost certainly agree that divorce and bankruptcy are two of the most stressful experiences that a person can endure. In such seasons of extreme difficulty, it is often difficult to see very far into the future, especially if a person is trying to determine whether he or she should file for bankruptcy or divorce first.

If you find yourself in this difficult circumstance, filing for bankruptcy before divorce presents a few distinct advantages that may make a subsequent divorce easier on both you and your spouse. If, for instance, both you and your spouse are likely to file for bankruptcy, then filing for the bankruptcy while you are married allows you to avoid the costs of filing individual bankruptcies.

Payday loans, a risk not worth taking

If you are one of the numerous Ohio residents who is struggling from pay check to pay check, you have likely looked at instant money solutions. Payday loans are extremely popular, but are they a risk worth taking?

There is nothing like being short on cash when an emergency strikes or when money runs out between pay checks. A payday loan can offer quick cash to get you through until your next payday -- at least, that is what lenders claim they do. What they won't tell you is how much in interest you will end up paying.

Spousal and child support and Chapter 13

Chapter 13 bankruptcy allows an individual with significant debt and significant income to halt collections practices by creditors and restructure his or her finances to pay the debt down over time. While abiding by the strict guidelines laid out for a Chapter 13 restructuring, some debtors may place a stay on collections regarding child support or spousal support, but the bankruptcy does not allow discharge of these obligations.

In many cases, a Chapter 13 bankruptcy does not affect support issues at all. Ideally, the debtor continues to pay his or her support obligations throughout the process and pays down any owed support, but if the debtor specifically requests a halt to support collections, a court may allow it.

Do I qualify for more than one Chapter 7 bankruptcy?

After discharging debt in a Chapter 7 liquidation, a debtor may sometimes need additional relief from his or her debt. While it is possible for a single person to receive multiple discharges under Chapter 7, it requires special planning and patience. There are a number of actions a debtor may take that could invalidate a second Chapter 7 procedure, leaving the debtor with many fewer options than he or she may believe are available.

Courts generally choose to deny Chapter 7 bankruptcies if the person filing received a discharge under Chapter 7 within eight years of filing the second bankruptcy. The debtor may even see a Chapter 7 bankruptcy denied if he or she underwent a Chapter 12 or Chapter 13 bankruptcy with in the last six years.

Are your spouse’s credit cards your problem after divorce?

When a couple chooses to get divorced, knowing how to handle a spouse's credit card debt held within the marriage is often very difficult. While this is normal, that does not diminish how vitally important it is to make sure a person understands his or her relationship to their spouse's debt before he or she rushes into the divorce process.

Unless handled very carefully, debt held within the marriage can follow divorced spouses for years after the marriage is officially dissolved. This is especially true of credit card debt. If you face the prospect of divorcing a spouse with significant credit card debt, you may want to begin preparing to deal with this debt sooner rather than later.

How does wage garnishment work, and how can I make it stop?

There are many unpleasant consequences to owing a significant amount of debt. From dealing with constant harassment from creditors to facing threats of foreclosure, it can be both stressful and overwhelming for an Ohio consumer. This is especially true when you start losing part of your paycheck to wage garnishment.

While it may seem hard to believe, it is actually quite possible that a creditor can move to have a portion of your wages garnished to go toward the repayment of certain debts you owe. It may feel like an invasion of your personal life and a threat to your financial well-being — and it is. However, through bankruptcy, you have the power to make it stop.