Chapter 7 Bankruptcy in Cincinnati OH is popular because it allows people to liquidate their debts and get a fresh start. However, before filing, borrowers should understand what this type of bankruptcy can accomplish. This guide will cover some things to consider before filing for Chapter 7 bankruptcy protection.
The Means Test
Before filing for Chapter 7, the borrower should find out whether they’re eligible. The means test is designed to prevent abuse and fraud in a liquidation-based system, and it assesses the borrower’s assets and income to find whether they really need Chapter 7. State laws and formulas are factors, and it’s important to consult a bankruptcy attorney to determine eligibility.
Previous Filings
Another fraud deterrent is the consideration of past bankruptcy filings. If someone has filed Chapter 7 in the past, they cannot file for another eight years. Conversion of Chapter 13 to Chapter 7 is quite common. In these cases, eligibility is once again determined via a means test. Borrowers should consider that conversion will lower their credit score because two bankruptcies will appear on the public record.
Non-Dischargeable Debt
Some debts can’t be discharged, which means that Chapter 7 won’t eliminate them. Laws vary by location, and it is best to consult a local lawyer to find out which debts are nondischargeable. The most common debts are a child and spousal support, student loans, and tax debts. If most of a person’s debts cannot be discharged, Chapter 7 may not make much sense.
Non-Exempt Assets
A person’s assets are categorized as exempt or non-exempt, with non-exempt items at risk of liquidation. The most at-risk properties are real estate, financial accounts, and vehicles. Therefore, before considering Chapter 7 Bankruptcy in Cincinnati OH, the borrower should evaluate his or her level of risk.
No Frivolous Spending
Chapter 7 filing liquidates personal loans and credit card debt, and certain limits are placed to prevent fraud. Any purchase of luxury services or goods made by credit card within 90 days of filing and in excess of $1150 is considered a nondischargeable debt. Cash advances and personal loans made within 70 days cannot be discharged, and debtors should remember that fraudulent activity leaves them at risk of a complete dismissal of the case. If a client wants to know more about us, they can call the office or visit the website to set up a consultation.
