No one wants to think about the possibility of bankruptcy. The choice seems difficult at any time, so it is important to understand all the possible options for recovering from debt when it seems like they are limited.
Fortunately, federal and Ohio state law allows for several legal options for people struggling to escape debt or other financial hardship. The common types of bankruptcy are commonly known by the chapters explaining them in the U.S. Code.
Chapter 7 bankruptcy is a common tool for individuals seeking protection from creditors or wage garnishment. It is otherwise known as liquidation or a "fresh start" bankruptcy. A trustee takes over a person's assets -- excluding exceptions such as equity in a home or vehicle -- and uses them to pay all or some outstanding debt.
The point of liquidating assets is to generate capital to pay off debts, so the subject of the bankruptcy can return to financial health. As a result, many assets and properties may be covered by exemptions if they can be used to improve a subject's prospects.
Chapter 13 bankruptcy is another common type for people and organizations. Also known as "reorganization," Chapter 13 allows subjects to keep property if they arrange to pay some or all of the debt in a payment plan as long as certain limits are met. This process can also bring a mortgage or property taxes up to date.
An attorney with a practice in personal bankruptcy and addressing financial challenges can help prevent excessive payments or further financial damage by helping debt-laden people sort out the viable options for recovery.
Source: Ohio State Bar Association, "Bankruptcy," accessed Oct. 26, 2017