What Can I Keep?

One of the first questions I am usually asked in consultations is "can I keep my car?" This is understandable, because we need our cars! They get us to work, to school, to family...In this country, where we don't have a comprehensive transit system, cars are everything. So can you keep your car in bankruptcy?

Usually, YES. In Ohio, you can keep up to $4,000 in equity in your car. In other words, if you have a car worth $10,000 and you owe $6,000, you have $4,000 in equity and your car is safe from creditors. If you have a car worth $10,000 and you owe $15,000, you have no equity, and your car is safe. But, if you have a car worth $10,000 and you own it outright, you have $10,000 in equity and the car is at risk of being sold by the bankruptcy trustee. In that case, you would receive $4,000 from the sale, and the remaining $6,000 will be distributed to your creditors. If you just can't stand to part with your vehicle, and have more than $4,000 in equity, there are still options to have you keep your car. Be sure to ask your attorney what these options might be. 

What about your other belongings? Can you keep your house? Your jewelry? Your 401(k)? Most of your belongings are protected through exemptions. Think of exemptions as umbrellas: so long as the amount of the exemption (the size of the umbrella) is bigger than the amount of your property (the size of the things sitting under the umbrella), your property is protected. Different exemptions are applied to your property.--for this reason, you will want an experienced bankruptcy attorney who knows exemptions and can apply them correctly and strategically. 

Chapter 7 vs. Chapter 13

May 26, 2020

There are many different kinds of bankruptcy, each with a different purpose: Chapter 11 for individuals or corporations with high debt, Chapter 12 for family farmers and fishermen, Chapter 9 for municipalities, and so forth. However, for most people, the choice when considering bankruptcy is whether to choose a Chapter 7 or a Chapter 13. So what is the difference between the two?

Chapter 7

A Chapter 7 is sometimes called “liquidation” or “total” bankruptcy, although neither of those terms is accurate. It usually lasts (3) to (4) months, and discharges—or, eliminates the obligation for—any debt that can be discharged, such as medical debt, or most credit card debt.

A person can only file one Chapter 7 every (8) years, calculated as filing date to filing date. If you have filed a Chapter 7 within (8) years and find yourself needing to file bankruptcy again, a Chapter 13 may be an option for you.

Additionally, one must qualify for a Chapter 7 by being under a certain income limit. This calculation is called the Means Test, and is done by taking a person’s gross income from all sources (except social security), comparing it against the median in your state for your family size. If you are under that limit, you automatically qualify for a Chapter 7. If you are over, you may still qualify, but you would need an attorney to calculate the second part of the Means Test to see if you might qualify.

Chapter 13

A Chapter 13 is a reorganization of your debt. There is a “plan payment” associated with a Chapter 13 bankruptcy, and is intended to be both affordable, but also to pay what must be paid in the bankruptcy. A Chapter 13 lasts at least (3) and no more than (5) years.

People choose a Chapter 13 for various reasons, including:

• Catching up on mortgage payments;

• Repaying tax debt;

• Getting current on child or spousal support payments;

• Needing bankruptcy relief but not qualified for Chapter 7;

• A personal preference to repay a portion of the debts owed.

If you are struggling with your debt, call an me today to discuss what your options are.