Ohio Chapter 13 Bankruptcy

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Not Born That Way!

  • Before it became an instrument of evil (see bankruptcy history below), Chapter 13 bankruptcy was known as a “wage earner’s” plan, in the expectation that individuals with regular income would work with the court and trustee to craft a plan to repay all or part of their debts.
  • So used, and justly, Chapter 13 helped creditors recover what was due them, and helped debtors keep property that might otherwise be liquidated.

What’s The Deal?

  • The plan spans 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.
  • If the debtor’s  monthly income is greater than the state median, the plan will most likely be for five.
  • Plans may not extend beyond sixty months.
  • Chapter 13 allows Debtors to keep valuable assets, like houses, heirloom or automobiles.
  • Debtors keep their property and make regular payments to their creditors, at a usually drastically reduced rate, to their creditors while being protected from lawsuits, garnishments, and collections.
  • Aside from benefiting credit card companies by forcing middle class debtors into paying things they otherwise could have discharged, Chapter 13 is superior to Chapter 7 for foreclosure defense.
  • Also, Chapter 13 Debtors can receive a “super discharge” of debts normally not dischargeable under Chapter 7.
  • Chapter 13 Debtors can “strip off” unsecured second mortgages, and can protect co-debtors from collection.

Bankruptcy History Lessons : The Devil Is In The Details…

  • Sometime in the early 1780′s, the U.S. Congress sold its soul to Beelzebub. Its moral standing has done little to improve.
  • In 2005, as though to prove that when in the basement of economic justice, it could, in fact, to dig deeper, a Republican Congress gave the Finance, Insurance, Real Estate and Service industries a big, fat, sloppy, cheaply-bought kiss by restricting the access of the middle classes to bankruptcy protection.
  • Our representatives were very, very worried that working people were having fun and then not paying for it, and felt it should make the penny-minding concerns of Citibank and Goldman Sachs its own.
  • Luckily, there was nothing at either of those institutions worth regulating!

Bad Deal: BAPCPA

  • In 2004, President George W. Bush signed a law reserving Chapter 7 Bankruptcy protection to Debtors’ incomes are below their state’s median income, forcing everyone else to file under Chapter 13.
  • Instead of being able to enjoy a “bail-out” by sloughing their debts off on an insurance company, a derivative counter-party, the creditor itself or maybe, perhaps, the United States of America’s taxpayers, middle class Debtors often repay, albeit at a reduced amount, the same companies who enjoy types of benefits and protections they lobbied, successfully, for consumers and debtors to lose.

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