Over 40,000 Ohio residents file for bankruptcy every year. For many filers, bankruptcy provides:

• A way out of crushing debt
• Relief from harassment by debt collectors
• A fresh financial start

But bankruptcy laws are complex and have changed significantly in recent years. This has left many prospective filers unclear on how bankruptcy works, who it is appropriate for, and what benefits bankruptcy can provide.

If you are considering filing bankruptcy in Ohio, here’s what you need to know.

Under federal bankruptcy laws, applicants can be:

• Individuals
• Married couples
• Partnerships
• Corporations or other business entities

In order to file in the state of Ohio, applicants must meet one of the following criteria:

• Be residents of the state
• Own or operate a business in the state
• Be able to demonstrate that they spent the majority of their time in the state within the 180 days prior to filing

Prospective applicants who wish to file for Chapter 7 bankruptcy must also pass a Means Test.

Courts use the Means Test to determine whether applicants have the income and resources to pay off some of their debts.

The Means Test has two steps. First, filers calculate their gross household median income for the six months prior to filing. So, for example, if an applicant is filing in June, they will calculate their income from December first of the previous year to the last day of May of the current year.

Individuals must account for all of the following types of income when calculating:

• Gross wages
• Alimony and child support
• Business or rental income
• Unemployment income
• Income from pensions or retirement funds
• Any monies or support contributed to the household by roommates, romantic partners, family members, or others

Social Security and disability benefits do not count toward income totals.

Once filers have their median income, they compare that number to the state median income for households of their size.

To make this comparison, filers must use the official median income numbers compiled by the U.S. Census Bureau. These numbers are available from the Office of the United States Trustee (UST).

Applicants whose incomes are below the state median are eligible to apply for Chapter 7 bankruptcy in Medina and Wayne County. With some exceptions, applicants with incomes above the state median must apply for Chapter 13 bankruptcy instead.

Even applicants who otherwise qualify may be ineligible to file for bankruptcy if they meet certain criteria.

For example, applicants are not eligible if they previously filed for bankruptcy but had their case dismissed within the last 180 days due to:

• Refusal or failure to appear in bankruptcy court
• Refusal to comply with bankruptcy court orders
• Their request to end the case prior to resolution

Similarly, applicants who filed for bankruptcy in the past and had their debts discharged must wait a certain amount of time before they are eligible to file again.

The exact amount of time they must wait depends on:

• What chapter of bankruptcy they filed under before
• What chapter they wish to file under now
• The results of their previous case
• Whether any special circumstances apply at the time of filing

Depending on their circumstances, applicants may need to wait between 2 and 8 years after their last bankruptcy before filing again.

Once you have determined that you are eligible to file for bankruptcy, you can explore which type of bankruptcy is right for you. There are six primary types of bankruptcy.

• Chapter 7
• Chapter 9
• Chapter 11
• Chapter 12
• Chapter 13
• Chapter 15

Not all forms of bankruptcy are appropriate for or open to individuals. Chapter 9 bankruptcy is for municipalities. Chapter 11 is for businesses, specifically large corporations.

Chapter 12 is for family farming or fishing operations. Chapter 15 is for specialty cases.

The two types of bankruptcy commonly available and most suited to individuals, couples, and small businesses are Chapter 7 bankruptcy and Chapter 13 bankruptcy.

Chapter 7 bankruptcy is a liquidation of the applicant’s assets but normally people can keep their property by claiming the applicable exemptions.

Chapter 13 bankruptcy, filers adjust their debt and create a payment plan to address it. In a Chapter 13, the debtor does not lose any property.

Before choosing between these options, however, it is important to take a deeper look at their differences and the effects of those differences on filers.

Filing for bankruptcy under Chapter 13 in Medina County or Wayne County, can be ideal for individuals or households with a reliable income. In this type of bankruptcy, filers:

• Stop receiving calls from debt collectors
• Do not have to worry about their belongings being repossessed
• Can keep all or most of their assets, such as their homes and vehicles
• May enjoy more stability and consistency in their living situations than Chapter 7 filers

The key to these great results is their repayment plan. Filers work with the court to develop a plan that lets them repay a percentage of their debts over time.

Filers with median incomes below the state median set up three-year repayment plans. Fillers with median incomes above the state median set up plans that are five years long.

As long as applicants continue to repay their debts as laid out in the plan, their creditors cannot:

• Attempt to collect on debts outside of the payments scheduled in the plan
• Start new collection efforts
• Attempt to collect any money or assets from co-signers on the applicants’ debts
• Otherwise harass them or their co-signers

Chapter 13 repayment plans can lower filers’ monthly payments and extend how long they have to pay off bills. It can help them keep their assets and rebuild their financial lives.

Filing for bankruptcy is never a decision to be taken lightly but a Chapter 7 bankruptcy in Medina County or Wayne County, is a choice filers must think about carefully. This is because unlike Chapter 13, applicants who file under Chapter 7 may have to turn over some of their property in the bankruptcy or pay an amount to keep it.

Exempt Property in Ohio

Not all property is forfeited under Chapter 7 bankruptcy in Ohio. Filers can keep:

• Up to $145,425 in equity in their home of residence
• $4,000 in equity in a single vehicle
• Up to $2,550 in tools or property related to their profession
• $1,325 worth of other property of the filer’s choice

What this looks like will vary from case to case. Cars are an excellent example. For instance, if you own a car outright and it is worth less than the $4,000 in equity allowed under Chapter 7, then you may keep the car.

If you are still making payments on a car loan, you can keep the car if the equity in the vehicle is less than $4,000

Filing for personal bankruptcy under Chapter 7 can be a powerful way to discharge serious debt. It can give applicants a clean financial start that they might not be able to obtain any other way. Filing a Chapter 13 is a good alternative to Chapter 7 bankruptcy if the debtor may lose a piece of property in a Chapter 7 because a debtor does not lose their property in a Chapter 13.

Before you can file for business or personal bankruptcy in Ohio, you must participate in credit counseling.

Not just any credit counseling will do. Prospective filers must complete a specific pre-bankruptcy course offered by an approved provider. Most providers allow participants to complete the course online or by phone. This ensures that every potential applicant has access.

On average, this course costs between $20 and $25. In cases where applicants are filing with a spouse or partner, both parties must take the course.

During the course, enrollees will work with credit counselors to develop a picture of their financial situation. They may then create a potential plan for paying down their debts. This information must be turned over to the court during their bankruptcy case, which is why they must complete the course prior to filing.

Consulting an Ohio Bankruptcy Attorney

Technically, filers do not have to consult a bankruptcy attorney before they submit a bankruptcy petition in Ohio. However, all prospective applicants are strongly encouraged to consult an experienced bankruptcy attorney prior to filing.

Bankruptcy laws are complicated and the process can be, as well.

For example, failure to respond to court demands in a timely manner can cause an applicant to have their case dismissed. This denies applicants the financial release bankruptcy can offer. It also prevents them from trying again for at least 180 days.

Moreover, failure to handle petitions in an organized and informed manner from the beginning often leads to lost time and higher total costs. Seeking guidance from an experienced Ohio bankruptcy attorney can help filers navigate Ohio bankruptcy laws with a minimum of stress. It also ensures the best possible results.

Applicants need to collect a variety of documents before they can file for bankruptcy in Ohio. Both the content and the format of these documents matter.

Documenting Assets and Income

To begin with, applicants should gather the following:

• Their federal and state tax returns for the three years prior to filing for bankruptcy
• Titles to any vehicles they own, including boats and other recreational vehicles
• Pay stubs or other proof of income for the seven months prior to filing
• Documentation of any other forms of income received in the seven months prior to filing
• Bank statements showing their current balances and activity for the six months prior to filing
• Copies of any life insurance policies they hold
• Up-to-date statements on 401(k) and other retirement accounts they possess

Property owners will also need:

• The deed to any homes or land they possess, in Ohio or elsewhere
• Proof of homeowners insurance
• Current mortgage statements

Documenting Debt

In addition to documenting their assets, applicants must document their debt. To this end, they should collect:

• At least one current copy of their credit report
• Their most recent bills, showing creditor contact information and account numbers
• Documentation of any loans they currently hold

Other Documentation

In addition to the documents above, applicants will need to gather the following before filing:

• At least one form of legal ID such as a driver’s license
• Their Social Security Card
• Documentation of any lawsuits filed against them, including home foreclosure proceedings
• Documentation of any lawsuits they have filed or intend to file against others, including workers compensation cases
• Divorce decrees, where applicable
• Current child support agreements or orders, where applicable

Also, if filers have ever filed for bankruptcy before, they must submit a copy of the documentation from those cases with their petitions. This is true regardless of how long ago that bankruptcy occurred or what jurisdiction it was in.

Once applicants have gathered their documents, they can begin filling out a bankruptcy petition. These forms can be extensive, but applicants must complete each one fully and carefully.

Applicants who cannot submit their applications in person may give another person Power of Attorney to submit their documents for them.

Applicants should keep a complete copy of their documents as submitted for their reference. They may wish to organize them in clearly labeled binders or folders for easy reference and retrieval throughout the case.

While Ohio bankruptcy courts may accept online applications, Bankruptcy Attorney Mary Lou Burns has been filing bankruptcies in Medina and Wayne County remotely since before the pandemic. This ensures a smooth and stress-free remote filing process for you. Allowing you to complete your entire bankruptcy remotely, by communicating with through phone, mail, email, text and/or fax.

Bankruptcy Fees

Applicants must pay a court filing fee when they submit their petition. These fees can vary slightly, but filing for Chapter 7 bankruptcy in Ohio generally costs around $338. The Court filing fee for a Chapter 13 bankruptcy generally costs around $310.

Filers may pay using:

• Cash in exact amounts only
• Money orders
• Cashier’s checks

The court will not accept debit cards, credit cards, or personal checks.

When an applicant files their petition, the court assigns an Ohio bankruptcy trustee to the case.

The trustee may request additional documentation or information. Applicants must provide that information or risk their case being dismissed.

They must also complete a second credit counseling course. Like the pre-filing courses, these courses are:

• Offered by approved agencies
• Between $20 and $25 each
• Mandatory for all filers
• Available online, in person, or by phone

Filers can take this course at any time after their case is filed with the Court.

Between 20 and 40 days after an applicant files, the trustee for their case will hold a 341 meeting. This is a meeting of the filer’s creditors. However, creditors rarely attend the meeting.

Filers must attend. If they have applied together with a spouse or a partner, both parties must attend.

During the meeting, the trustee and creditors will ask filers questions about their:

• Income
• Assets
• Debts
• Overall financial situation

The goal of the meeting is to verify that all the information included in the filing is correct. It also provides an opportunity for the trustee to ensure the filing was made in good faith and is not an attempt at fraud. Finally, it affords creditors an opportunity to voice any concerns or objections they may have.

The idea that all debt disappears when you successfully file for bankruptcy is a myth. Bankruptcy can eliminate enormous amounts of debt, but it does not apply to all forms. Some debts remain.

Examples of Debts that are not wiped out by bankruptcy in Ohio include:

• Alimony
• Child support
• Certain types of taxes
• Fees, fines, and penalties owed to the government or ordered by a court of law
• Loans taken against your retirement plan funds
• Any debts remaining after a previous bankruptcy case

Critically, filers need to know that student loan debt also does not disappear during bankruptcy. They will remain responsible for it post-bankruptcy, even if they file under Chapter 7.

Filers may apply separately to have their student loan debt discharged if they can prove that it represents a serious hardship. Being successful in such a case usually requires the assistance of an attorney.

Finally, individual creditors may appeal to the court to make the debt you owe them non-dischargeable. The court may agree if:

• You incurred the debt via fraud
• You purchased luxury items just before filing for bankruptcy
• The debt is the result of harm or damage you intentionally caused to another person or their property
• The debt is the result of a crime you committed such as theft or embezzlement
• You tried to hide the debt by not listing the creditor when filing for bankruptcy

A wide variety of other laws also impact Ohio residents filing for bankruptcy. Many of these laws are little known and poorly understood.

For example, most filers are unaware that selling their personal property before filing for bankruptcy can impact their case. This can be true even of assets sold several years before filing.

Courts may examine the gift or sale of real estate, vehicles, and personal property to determine:

• When you transferred ownership of things
• If you sold them for market value
• How you used the income from those sales
• What your intent was at the time of gifting or sale

If the court determines that you transferred property in an attempt to get out of paying legitimate debts, you could face trouble. Even innocent transactions poorly handled can complicate your case.

This is only one example of the myriad of bankruptcy laws that may affect your case. It is a prime illustration of why applicants should contact an attorney before filing.

When you file for bankruptcy, details matter.

Completing your paperwork correctly on the first try can save huge amounts of time and money. It can also make the difference between getting all your eligible debts discharged and being left with debt after the case.

When you apply also matters. A difference of just a few weeks can radically alter your position in court and your results.

But bankruptcy law is complex. Filers who attempt to go it alone often suffer from innocent and understandable but costly mistakes.

Hiring an experienced bankruptcy attorney who handles bankruptcies in Medina County and Wayne County protects you from these errors. Working with a bankruptcy attorney:

• Can shorten and simplify the bankruptcy process
• Strengthens your position and improve your outcomes
• Protects you, your family, and your assets
• Can help you get through your case with a minimum of extra court fees and expenses

Experienced attorneys can break down the vast body of bankruptcy law in ways that make it accessible. They can help you:

• Understand your options
• Evaluate the timing and choose the best timing for your needs
• Reduce the burden of gathering, completing, and filing paperwork
• Take the extra steps you may need to get rid of persistent debt such as student loans

At every step, working with an Ohio bankruptcy attorney is your best chance to achieve great results and find real financial freedom through bankruptcy.

If you are considering filing bankruptcy in Ohio, don’t tackle the process alone. Schedule a free consultation with us today or browse our blog for more empowering information on Ohio bankruptcy laws and how you can get a fresh financial start.