Granger Law Firm LLC

Do I qualify to file Bankruptcy in Ohio?

If you’re having a hard time dealing with your debt, you may want to think about filing a bankruptcy. While it’s not an easy topic to approach, bankruptcy helps millions of individuals each year start over. It helps you by getting rid of many debts and lets you get a fresh start without having to deal with debt collectors, interest charges and late fees that pile up and wage garnishment.

One important question to answer when you file for bankruptcy is whether it will be under Chapter 7 or Chapter 13. The Chapter 13 lets you work together with a trustee to set up a payment plan that will be used during the next five years to pay back a portion to your creditors. In the end, the remaining unsecured debts are discharged. Chapter 7 bankruptcy is for those who have a large amount of debt with limited assets. Here, a bankruptcy trustee will liquidate any non-exempt assets that you have to reimburse your creditors. In order to qualify for a Chapter 7 bankruptcy, you must show that you are unable to pay your creditors through a “means test.”

The first element considered is your income. If your average monthly income during the last six months is less than the median income in your state, you will automatically pass the test. In Ohio, this amount for a single earner is $3,567 per month. If your income is higher than the median amount, you must proceed to the next step of the means test which involves calculating your disposable income. Here, allowable expenses are deducted from your average monthly income. This includes living, housing and vehicle costs. At the end of the calculation, if you’re left with less than $125, you pass the means test. If the amount is over $207, you will not. If it falls in between, you will need to proceed to the next step.

This step involves calculating whether your monthly disposable income allows you to pay off at least 25% of your debt in the next 5 years. If it doesn’t, you qualify for Chapter 7. If it does, you may need to file under Chapter 13. Take note that courts will take the totality of your circumstances into account when determining the type of bankruptcy for which you are eligible. It is important to consult an attorney who can review your situation and give you accurate advice.

If you have questions on whether bankruptcy is the route for you to take to regain control of your finances, please contact Granger Law today for your free consultation with an attorney.



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