Is Bankruptcy a Good Idea in Ohio?

If you are in an overwhelming amount of debt, you may be unsure what your options are. As such, you may assume that filing for bankruptcy is in your best interest. However, because of the impact this process can have on your credit, it’s critical to understand when filing is ideal. The following blog explores what you should know about the bankruptcy process and why working with Franklin County bankruptcy lawyers can help you determine if this option is a good idea for your circumstances.

What Are the Different Filing Options for Consumers?

In most instances, consumers have two primary options to pursue a bankruptcy case. The first choice is Chapter 7, in which the trustee assigned to your case will liquidate your non-exempt assets to pay back creditors. Once your assets have been seized and sold, the remainder of your eligible debts will be discharged. This means you are no longer legally obligated to repay these debts. You should note, however, that this process does require you to meet the eligibility requirements to file. This is known as the means test, and it will compare your annual income to other households of a similar size in your state.

Your other bankruptcy option as a consumer is Chapter 13. This process places you on a repayment plan in which your debts are compiled into one large sum, on which you will make a single monthly payment to your trustee. The trustee will then distribute the funds to each creditor. While this helps protect your property, you should note that this process is generally more expensive and can take up to five years.

When Is Filing for Bankruptcy a Good Idea?

For the vast majority of filers, bankruptcy is a last resort option. This means all other avenues to avoid filing have been exhausted. Typically, this is a last resort due to the considerable impact filing can have on your credit score. While you may receive the debt relief you need during this process, bankruptcy can lower your credit score by up to 250 points and make it much more difficult to obtain loans.

As such, bankruptcy is a good idea if you have exhausted all other avenues to manage your debt, including budgeting, negotiating settlements with creditors, and consolidating your debt.

Bankruptcy may also be an ideal option if you are facing lawsuits or judgments related to your debt, such as foreclosures or wage garnishments. This is because bankruptcy grants you an automatic stay, meaning all creditors must cease collection efforts against you when you file. You may then try to catch up on payments to avoid losing your home or being sued for debt.

If you are unsure whether or not to file for bankruptcy, it’s in your best interest to connect with an experienced attorney at Cousino & Weinzimmer LLC. Our team understands how overwhelming it can be to try to navigate bankruptcy on your own, which is why we will do everything in our power to help you through this process so you can reap the benefits of bankruptcy. When you need help, do not hesitate to contact our firm today to learn more.