Filing Bankruptcy In Ohio

Basics For Buckeyes:

Ohio Bankruptcy The Means Test

Assuming a debtor has passed a “means-test,” he or she can file a case under 11 USC 7, or Chapter 7 Bankruptcy in Ohio. To pass, a debtor must earn, for six months prior to filing, less than the State’s median household income for a family of like size–e.g., in Ohio, for a family of four, that’s $74,000 per year.

The Trustee

In a Chapter 7, the court appoints a private attorney called a trustee to evaluate an estate. The trustee decides to decide if there are assets to sell to pay some money from the proceeds to unsecured creditors. Few Chapter 7 debtors have assets to sell. Those are called “no asset” cases.

Keeping Your Stuff

  • Ohio’s exemptions allow debtors to keep equity in property that might otherwise be sold. Commonly used Ohio exemptions include $20,200 of a “homestead,” $3,225 in one car, $400 of cash, $20,200 recovered in an injury suit, $10,775 of things like electronics, clothes, or furnishings, $1,350 of jewelry, such as wedding rings, $2,025 in tools if used for work, and a “wild card” of $1,075 toward any property the debtor wants to protect.
  • Chapter 7 in Ohio can remove “community debt,” and many divorcees often want to be rid of debts incurred in the failed relationship. Chapter 7 eliminates responsibility for joint debts, and also serves a pleasant function for many divorced debtors: it leaves the joint debts squarely with the non-filing ex.
  • Not all debts are dischargeable. Ohio debtors can’t discharge back-domestic support, recently incurred taxes, student loans, or criminal fines, penalties & court costs. Chapter 7 cases usually last in the range of three to five months from the date of filing.

Failed the Means Test?

Debtors whose incomes are too high, or who have property they want to protect from a trustee, will want to file under Chapter 13, which means they will repay secured debts in arrears over time, and unsecured debts at a reduced amount, to the extent they repay them at all.

Chapter 13 Takes Longer

  • Chapter 13 plans span three to five years.
  • If the debtor’s monthly income is less than his state median, the plan will be for three to five years.
  • Debtors with monthly incomes greater than the state median for households of a like size, the plan will most likely be for five.
  • By law, Chapter 13 plans may not exceed sixty months.

Stay, Meet, Learn

  • A “stay”, or court ordered cessation of collection, starts from the moment a case under either Chapter has begun.
  • Both Chapter 13 and Chapter 7 require a “meeting of creditors,” or a “341 meeting.” At that meeting, the trustee also queries the debtor on the particulars of his or her estate. Unsecured creditors rarely show. Most 341 meetings last fewer than ten minutes.
  • In both Chapters, debtors must complete two trustee approved “debtor education” classes: one prior to filing and one after the 341 “meeting of creditors.”
  • The classes are usually conducted online or over the phone, and cover such weighty, uncommonly understood matters as ledger keeping, budgeting and living within one’s means.
  • In the Southern District of Ohio, the Chapter 13 Trustee sponsors a live, mandatory version of the second class, which by all accounts is worthwhile and informative.