Do I Qualify to File Bankruptcy in Franklin County, Ohio?
If your debts have become unmanageable, then filing for bankruptcy may be the best option to start a new financial chapter. Filing for bankruptcy can save one from a lot of trouble including unending calls from creditors. However, people need to understand how bankruptcy works before getting started.
Our team at Wood & Brewer has years of experience assisting clients with chapter 7 and chapter 13 bankruptcy cases. We can help you decide the type of bankruptcy that is best suited for your situation. Contact us today for a free consultation.
Chapter 7 Bankruptcy Requirements
When filing for Chapter 7 bankruptcy, a bankruptcy trustee is appointed to examine the Debtor’s schedules and look for assets to liquidate and distribute the money among their creditors. In a Chapter 7 case, most if not all of the assets will be exempted – meaning the person filing for bankruptcy has a right to keep them.
Debtors are required to take a means test to determine whether they are eligible for Chapter 7 bankruptcy. The goal of the means test is to exclude high income earners from filing for Chapter 7 bankruptcy. A Debtor’s income must be less than the median income for the State of Ohio in order to file a chapter 7.
If a person’s income exceeds the median income, they may still qualify for chapter 7 if the person has sufficient expenses to reduce their income below the median income threshold. In the event that the income is still above median, then a person may qualify for Chapter 13 bankruptcy rather than Chapter 7.
Exceptions for Chapter 7 Means Test
While any person filing for Chapter 7 bankruptcy is required to undergo means testing, there are certain exemptions. One will not have to take a means test if:
• They are a disabled veteran
• Most of their debts are business, tax or other non-exempt tax
• They are a member of the National Guard who is on active duty and activated for at least 90 days.
Chapter 13 Bankruptcy Requirements
If a person is not eligible to file for Chapter 7, then they may qualify for Chapter 13 bankruptcy. A Chapter 13 bankruptcy allows people to pay back their debts over a period of three to five years. The means test in a Chapter 13 determines the length of the repayment period. If a person’s income is over the median income, then the repayment plan must last 60 months.
Why It Is Important To Work with an Ohio Bankruptcy Lawyer
The means tests for Chapter 7 and Chapter bankruptcy can be complex and difficult to understand. But a bankruptcy lawyer can help one conduct the means test properly to ensure that only the correct expenses are deducted from their income.