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personal bankruptcy chapter 7 and chapter 13

Which Type of Personal Bankruptcy is Right for Me?

When bills start piling up and there’s no hope of paying them off, filing for bankruptcy in Ohio can give you a clean slate. Bankruptcy provides the opportunity to wipe out your debts, but the type you choose will determine whether you can keep your assets.

Here is a basic overview of the two most common types of personal bankruptcy. Before you file the initial paperwork, consult an experienced bankruptcy attorney to discuss your options.

Chapter 7 Bankruptcy

Chapter 7 bankruptcy isn’t available to everyone; you have to pass the “means test” to ensure your income is under the maximum limit. However, if you do qualify, it will wipe out your unsecured debt like credit cards and medical bills.

If you’re eligible, you are required to sell all of your non-exempt assets to pay off your creditors. Some property can be protected by an exemption, such as household goods, clothing, cars, and equity in your home. The rest of your valuable property must be documented so the bankruptcy trustee can determine what must be sold. If you have no non-exempt assets, you won’t have to sell anything.

Once you’ve complied with the requirements, your remaining unsecured debt is forgiven—even if the assets weren’t enough to pay off your entire debt. During the course of the case, debt collectors are prevented from contacting you. After the discharge, you are no longer liable for paying them back.

Chapter 13 Bankruptcy

You can file for Chapter 13 bankruptcy if you don’t pass the means test for Chapter 7, or if you want to keep some of your assets. Chapter 13 bankruptcy requires the debtor to create a repayment plan which reimburses creditors for all or a portion of your debt. This type of bankruptcy is suitable for people with regular income who are simply behind on their bills and need to prevent litigation, wage garnishment, or catch up on their mortgage. How much you’ll pay monthly depends on your debt, income and other important factors.

When you file for Chapter 13 bankruptcy, keep in mind that you’ll need to repay your creditors an amount equal to the assets you are retaining.

A Word of Caution

Filing for bankruptcy will not discharge all of your debts. For example, child support, alimony, and most tax liens are not eligible. It’s important that you discuss your case with an attorney to get a clear picture of how each type of bankruptcy may affect you.

Talk to an Ohio Bankruptcy Attorney Today

When you need bankruptcy assistance from an experienced lawyer, turn to Dworken & Bernstein. Our attorneys can help you make the right choices for your individual needs. Call today for a consultation.

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