In today's troubled economy, many in Ohio and nationwide may be having trouble paying their bills. Home mortgages may be for more than the current value of a home, and major medical expenses can quickly eat up all of a family's assets at the same time that injury, illness, or disability makes it impossible for a family member to work. Sometimes, this necessitates a second family member stay home to care for them. For many, filing a bankruptcy case may be a genuine way out, allowing them a fresh start in life and getting them out of a crippling mountain of debt.
There are two major types of bankruptcies for individuals: the Chapter 7 bankruptcy and the Chapter 13. With the Chapter 7 bankruptcy, your existing debts (with a few exceptions) are forgiven or discharged, and your existing assets divided up among creditors. There are some assets exempt from seizure, however, so in many instances in which an individual or family has experienced major financial difficulty, they may not own anything beyond what is exempt under the bankruptcy law as applied in their state.
In Chapter 13 bankruptcy cases, your existing debts, or a portion of them, are paid off through installment payments for a time ranging from three to five years. In the meantime, interest stops running on those debts being paid off. A Chapter 13 is often a useful way to get rid of credit card and medical debts while continuing to pay such secured loans as a home mortgage or car loan and keep those assets.
Filing either one of these two types of bankruptcy immediately puts a stop to any further collection action, including letters and phone calls from creditors, wage garnishment, and lawsuits or repossessions. An experienced bankruptcy attorney can quickly advise you if bankruptcy is right for your situation, what property is exempt from creditors' claims in your state, and which of your debts can and can't be discharged by the court.
Source: CNBC, "The good thing about bankruptcy" Sakina Spruell, Oct. 21, 2013