Cleveland Chapter 7 Bankruptcy Attorney
Definition of Chapter 7- Quick overview
Chapter 7 bankruptcy is the most common form of bankruptcy. In a nutshell, a trustee is appointed to your case and part of their job is to take your assets, sell them, and then distribute the money to the creditors who filed claims. However, the trustee does not take all your assets; you’re allowed to keep enough exempt property to have a fresh financial start.
Exemptions refer to federal and state statutes which allow you to protect certain amounts of property when you file for bankruptcy; such as cars and homes. Ohio has its own specific bankruptcy exemptions that you would use to protect your property. In addition, you may also use the federal nonbankruptcy exemptions, which offer protection over retirement benefits, death and disability benefits, group life insurance, and other miscellaneous benefits.
On the other hand, the trustee would sell non-exempt property; items that the debtor must relinquish in order to liquidate the debt. This usually includes cash, bank accounts, bonds, stocks, and other investments. Jewelry, family heirlooms, collections of valuable items are also up for grabs. Any second property, or motorized vehicle may also be sold. However, in Ohio, married couples filing a joint bankruptcy may “double” the exemption amount. This means they can each claim the full exemption amount for any property that belongs to them.
Income considerations for individuals filing chapter 7 Bankruptcy
The first step in filing for Chapter 7 bankruptcy is figuring out if you qualify by taking your state’s means test. Simply put, the test checks if you have enough disposable income to pay of some of your debt.Every situation is different, and different factors determine if you meet Ohio’s income requirements.
One thing to keep in mind, is that only individuals with primarily consumer debt have to take the means test. Business owners, or individuals with primarily business debt, do not have to take the means test in order to file chapter 7 bankruptcy. However, different rules do apply.
Business debt in Chapter 7 bankruptcy
If you are a business owner, Chapter 7 may be able to help save your business or offer a simple way to liquidate it. In a consumer bankruptcy, all dischargeable debts are dismissed and the debtor no longer has a legal obligation to them. In a business bankruptcy, there is no discharge or exemptions. All business assets are sold and the proceeds are given to the creditors.
The ways in which Chapter 7 bankruptcy can help business owners depends largely on the business structure. For instance, a sole proprietorship is not a separate legal entity that can file for bankruptcy. In this case, the business owner would file a personal Chapter 7 bankruptcy, and as a result the business debt would be treated as personal debt and get wiped out by the discharge. On the other hand, when it comes to corporations and limited liability companies, you can liquidate the business by filing a business bankruptcy, but you must wipe out your own liability for business debts by filing a personal bankruptcy. The benefit of a business chapter 7 bankruptcy is the simple liquidation it provides. It places the burden of selling assets and paying the creditors on the trustee instead of the business owner.
Benefits of having an experienced attorney
For many people, a Chapter 7 bankruptcy is the correct course of action when faced with financial hardship. It can relieve you of all your debt as soon as six months from the time you file. It may be the best choice for you, however, trying to file alone may become complicated and stressful. The best way to ensure that you get the most out of your Chapter 7 bankruptcy is with the help of a competent bankruptcy attorney. The law office of Irving S. Bergrin knows the ins and outs of bankruptcy, and will provide you with the information you need to revitalize your financial situation.
Other Law Practice Areas: