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Bankruptcy FAQs

  1. What is Bankruptcy?

    Bankruptcy is a federally protected way for consumers and businesses to either eliminate their debt or pay back their creditors. Bankruptcy typically falls into two categories: liquidation or reorganization.

  2. What is Chapter 7 Bankruptcy

    A Chapter 7 bankruptcy is a basic liquidation of an individual’s property for the purpose of repaying creditors and getting rid of any remaining debts. The bankruptcy process typically takes 4 months from the day the case is filed until the day you get your discharge. There will only be one hearing that you will have to attend, called a meeting of creditors. At the meeting, a bankruptcy trustee will review your petition for Chapter 7 bankruptcy and will likely ask some questions. Read more about Chapter 7 bankruptcy here

  3. What is Chapter 13 Bankruptcy?

    Under a Chapter 13 bankruptcy, you will be able to keep your property, but will have to prepare a payment plan to repay all or some of your debts within a 3 to 5 year period. Essentially, you will be reorganizing your debt into debts that will be paid and debts that will be discharged. In exchange for paying some of your debts, there are some important benefits the Code provides to you, which makes this a very important bankruptcy. Read more about Chapter 13 bankruptcy here.

  4. How does someone qualify for bankruptcy?

    Many people can qualify for bankruptcy, but not everyone needs to file for it. Depending on your financial situation, you will probably qualify for either Chapter 7 or Chapter 13. A “means” test, based on your income, is used to make that determination. Read more about how someone qualifies for bankruptcy here.

  5. How long will the bankruptcy process take?

    Chapter 7 bankruptcy typically lasts approximately 4 months. Chapter 13 bankruptcy lasts between 3 to 5 years.

  6. What are exemptions?

    Bankruptcy exemptions permit you to be able to keep some of your property and assets safe from being liquidated. Exemptions will either protect the entire value of the asset or up to a certain monetary amount. If an asset qualifies for an exemption, it will remain untouched and unaffected by your bankruptcy. Read more about exemptions and what is exempt in Ohio here.

  7. Are there alternatives to bankruptcy?

    If you are facing a financial crisis, filing for bankruptcy is not the only solution. There are many alternative options to solve your debt problems, but these are always better reviewed with a bankruptcy attorney who will be able to offer you the best advice based on your situation.

    The following are ways in which you can attempt to resolve your debt with your creditors:

    • Contact your creditors or debt collectors yourself. Once you have reached them via phone or letter, explain your financial situation and discuss payment plan options. While speaking with them, inquire whether any of your debts or payments can be reduced. You may also be able to negotiate a lower interest rate or a principal, debt forgiveness, or a longer period to to make payments. Creditors are often willing to settle for partial payment because receiving some form of payment is better than writing off your debt as a total loss.

    • Use a credit counseling agency to manage your debt. Credit counseling services work with creditors and lenders on your behalf to resolve your debt problems. They can assist in developing debt management and repayment plans, debt education, or referring you to another agency. If you decide to use a credit counseling agency, it’s important to know that they may charge you for their services. This can often be costly as well as unsuccessful in resolving your financial problems. Some are even scams. Most of the TV and radio commercials you hear on TV and the radio are scams – they will claim to resolve your debt problems for basically nothing.

    • Use an attorney to help you work out a debt settlement with your creditors. You will likely pay a lot less than going through a debt settlement or credit counseling agency, who may not even be able to work out a settlement arrangement.

    • Fight your disputed in debts in court. If you have been sued for a debt that you do not think you owe, you can pursue legal action in defense. Oftentimes, legal representation can be costly, so this is when you will want to decide if it is worth the investment.

  8. What is the automatic stay?

    Automatic stay puts an immediate halt to any impending legal action, and most actions by creditors or collection agencies. An automatic stay is a very strong shield that is put up around you once you have filed bankruptcy to stop your creditors from having any sort of contact with you. Automatic stay takes effect immediately once you have filed bankruptcy. Creditors must stop any and all communication with you including phone calls, letters, emails, or text messages. Once you have filed for bankruptcy and your creditors receive notification of the bankruptcy, it is illegal for them to contact you in any way. Should a creditor not cease contacting you, they may face penalties and fines from the court. Read more about automatic stay here.

  9. What happens during a 341 meeting of creditors?

    Approximately 30-45 days after your bankruptcy case is filed, there is a meeting called the Section 341 Meeting of Creditors. The meeting itself will only last 10-15 minutes, but you are required to attend with your attorney. You will answer questions under oath by a bankruptcy trustee and potentially creditors. If you are absent for this meeting, your case will be postponed and you and your attorney will need to explain why your case should not be dismissed. At the hearing the Trustee may request additional documentation from you that you will need to provide quickly.

  10. Am I going to lose everything?

    Regardless of whether you file for Chapter 7 or Chapter 13 bankruptcy, you will not lose ALL of your property. Each state has exemptions, which will enable you to keep certain property. If you file for chapter 7 bankruptcy, you will be able to keep all of your assets as long as there is there is not excess equity and you are current on your mortgage payments. If you file for Chapter 13 bankruptcy, you will be able to keep most, if not all of your property. Chapter 13 is intended for individuals who are able to afford basic monthly payments, but are just not able to stay current with other payments and bills. In a Chapter 13 bankruptcy, you are able to hold on to your property by reorganizing your debt and paying it off over the course of a three to five year period.

  11. Will I ever be able to rebuild my credit?

    Absolutely! Filing for bankruptcy will have a serious effect on your credit score. However, it is not impossible to repair your score once your bankruptcy case has ended. Through responsible financial management, you can rebuild your credit score and be back on track of your finances.vAfter you file for bankruptcy, your credit score may drop at least 200 points. The bankruptcy can also help by clearing up your debt to income ratio. In order to rebuild your credit, it is imperative that you pay all of your bills on time going forward. This will show creditors that you’re financially responsible. Another way of rebuilding your credit is monitoring your credit report. Staying up-to-date and making sure your credit report is correct is crucial, as inaccuracies and errors can slow down the rebuilding process. Learn more about rebuilding your credit after bankruptcy here.

  12. How long will bankruptcy appear on my credit report?

    Chapter 7 bankruptcy will remain on your credit report for 10 years from the date in which you file. Chapter 13 bankruptcy will be on your credit report for 7 years from the date in which you file. Learn more about bankruptcy and your credit here.

  13. When will I receive my discharge?

    The amount of time it takes for a discharge to occur varies, depending on when and what chapter bankruptcy was filed. In a Chapter 7 bankruptcy case, a discharge is usually granted approximately four months from the initial date the petition is filed with the bankruptcy court. In a Chapter 13 bankruptcy case, a discharge is typically granted as soon as the debtor has completed all of the payments under the payment plan. This usually happens at least three to five years after the case is filed. Any unsecured debts that were not paid off in the repayment plan are cleared and included in the discharge. Read more about discharges here.

Questions about Bankruptcy Filing? Call Today.

Whether you’re deep in debt or struggling to stay up with bills, there’s a solution to your financial situation. If you have questions about filing bankruptcy, our Cleveland bankruptcy lawyers at LHA have the knowledge and experience to fight for your best interest. Contact Ohio bankruptcy attorney Paul Kuzmickas today to discuss your options at or email us at advice@clevelandbankruptcyattorney.com.
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