What to Know if You are Facing Overwhelming Debt

• If bankruptcy protection is sought, your creditors can no longer contact you in any manner starting as soon as your case is filed.  This is referred to as the “automatic stay.”  Creditors may only file claims through the bankruptcy court proceedings.
   

• The bankruptcy statutes allow significant assets to be kept.  In most cases, you will be able to keep assets such as furniture, clothing, and many other household items, at least up to what are known as the “exemption limits,” so long as these assets are not subject to “rent-to-own” or similar financing arrangements.
   

• What assets are “exempt” from having to be paid or provided to the bankruptcy court? In Ohio, there are certain assets that are exempt from bankruptcy provisions.  One example is a family bible.  Those filing for bankruptcy in Ohio will never need to surrender it to the bankruptcy court under any circumstances.  There are certain other assets that are also exempt – it is best to consult with an experienced Cincinnati bankruptcy lawyer to find out what assets may be exempt in your case.
   

• What are the Exemption Limits? In the bankruptcy code, there are certain types of assets, such as clothing and furniture, which are not exempt from the bankruptcy code completely; however, there are statutory amounts that are exempt.  For instance, as of 2015, a person filing for bankruptcy in Ohio will have the right to keep personal clothing, and furniture up to $12,150.  The assets (or the value of assets) over these exemption amounts may be required to be paid to the bankruptcy trustee. 
   

• Even if your assets are over the exemption limits, you may be allowed to keep them. For example, assume that your household furniture and clothing is worth more than the exemption amount.  Frequently, the bankruptcy trustee will allow the debtor (the person or couple filing for bankruptcy) to keep the assets over the exempt amount.  In some instances the trustee may want only a small amount of the value over the exemption amount.
  
  Why would the trustee make this decision? The fact is that it takes time to collect personal possessions, store them, and pay to have someone sell them. Unless significant money is involved, the cost to collect, store, and sell assets such as used furniture and clothing will often cost more than the sales proceeds.
   

• What is unsecured debt? Unsecured debt is debt that is not secured by any specific assets.  Most credit card debt is “unsecured.”  When you pay for an item with a credit card, usually the credit card company cannot repossess the item that you buy if you don’t pay – instead, they are only entitled to bring a claim against you for the amount that you owe.
   

• What is secured debt? Secured debt is debt that is secured by specific assets.  For instance, if you have a car loan, your loan will be secured by title to your car.  If you don’t repay the debt, your lender can seize your car, or repossess it as part of the bankruptcy proceedings if you do not agree to continue making the required payments.  If you have a mortgage on your house, your lender can foreclose upon your house if you stopping making payments.
   

• Debt that does not have to be repaid under bankruptcy is deemed “discharged.” In Chapter 7 “liquidation” cases, unsecured credit card debt is completely discharged.  This means that even if you owed huge amounts of money – even over $100,000 – the credit card companies can never come back after you for the amount that you owed.  Credit card debt can be partially or completely discharged in a Chapter 13 case depending upon the terms of the repayment plan.