In the state of Ohio, there are restrictions regarding who can file for a Chapter 13 bankruptcy. According to the bankruptcy code, Chapter 13 bankruptcy is meant for sole proprietors, self-employed individuals and wage earners. In other words, Chapter 13 is meant for individuals and not businesses. An individual will need to have filed all tax returns for the past four years, have regular income and meet other requirements in order to qualify for a Chapter 13 bankruptcy.
A Chapter 13 bankruptcy allows a debtor to receive a release, or discharge of certain debts. In order to have debts discharged, the debtor must complete his or her bankruptcy plan successfully. Many Chapter 13 bankruptcy plans require debtors to pay a portion of their dischargeable debts under the supervision of a bankruptcy trustee.
A person in bankruptcy might still be able to receive his or her tax refunds. It is worth noting, however, that tax refunds might be used to pay back previous tax debts or might be delayed as the result of the bankruptcy. The Internal Revenue Service provides a tool on its website that allows taxpayers to check the status of their refunds. In addition, it is possible to contact the IRS by phone to determine the status of a tax refund.
The two most common types of bankruptcy for individuals are Chapter 13 and Chapter 7. A lawyer with a background in bankruptcy cases may explain both types of bankruptcy and help an individual determine which kind of bankruptcy is most applicable to his or her situation. In addition, a lawyer can help an individual collect the necessary documentation and file for bankruptcy.
Sources: Findlaw, "What is a Trustee in Bankruptcy?", 2014
Source: IRS, "Chapter 13 Bankruptcy – Voluntary Reorganization of Debt for Individuals", December 27, 2014