Top 5 Reasons People File Chapter 13 Bankruptcy in Ohio
Chapter 13 bankruptcy is an alternative to Chapter 7
It allows consumers to retain control of their assets and set up a monthly payment plan through the courts. It is a way to consolidate multiple debt payments into one and the monthly payment amount is determined by the court. While there are numerous reasons people file for bankruptcy, there are five common reasons consumers in Ohio file for Chapter 13 versus Chapter 7.
Chapter 13 is Another Option
Consumers with high incomes often do not qualify for Chapter 7 under Ohio laws. But, even with a high annual income, consumers can qualify for Chapter 13. Chapter 13 will provide consumers with the protection they need against creditors too.
Protect Non-Exempt Property
When a consumer files for Chapter 7 in Ohio, they face the possibility of losing certain assets. But, when a consumer files Chapter 13, they can keep those assets and not go through the process of liquidation.
Tax Debt Can Be Included
In Chapter 7 bankruptcy, a consumer cannot include their tax debts. But, Chapter 13 does allow a consumer to include their tax debts and gives them an additional three to five years to pay off their taxes. Also, by including tax debt in their Chapter 13 filing, a consumer can save on penalties and interest charges that they would otherwise accrue when paying off the debt themselves.
Many Ohio homeowners face losing their homes to their lenders. Chapter 13 is a way to help prevent foreclosure on a consumer’s property and gives the consumer an “automatic stay.” The court will then create a payment plan for the consumer that includes their mortgage; thus, allowing the homeowner to keep their home and avoid a foreclosure mark on their credit report.
Preventing Repossessions of Vehicles
Consumers who are at risk for losing their vehicle can use Chapter 13 to prevent it from being repossessed. Chapter 13 also protects the consumer from paying a large lump sum to satisfy back-owed payments on their vehicle, and the remaining balance will be included in the consumer’s repayment plan set by the court.