Benefits of Filing for Chapter 7 Bankruptcy

For individuals in the bankruptcy process, it comes down to two choices: Chapter 7 or Chapter 13. While both have their own benefits that are alluring to various situations, Chapter 7 is the most common form of bankruptcy in the United States - and for good reason! The advantages of bankruptcy are both immediate and long-term, making people happier despite their difficult financial situations.

Advantages of Filing for Chapter 7

Chapter 7 bankruptcies are known for canceling more individual debts. They give individuals the opportunity for a fresh financial start without having to worry about how they'll payback creditors. The process to apply and discharge debts usually takes 3-4 months and can be done with the help of a bankruptcy attorney. While we often hear negative things about filing for bankruptcy, opting for 7 has been known to provide many benefits including

1. Convenience. Because filing for a Chapter 7 bankruptcy only takes a few months, it is a fraction of the time that it takes to file for a Chapter 13. In fact, some 13 cases have lasted as long as five years! This shorter process is a convenience that allows you to get back on track much more quickly.

2. Protecting future income. Under 7, your future income is protected and isn't part of the bankruptcy process. However, because debts and repayments are restructured under Chapter 13, your future earnings are still going to be used to pay the bills. Your disposable isn't yours anymore.

3. Cost-efficiency. Filing for bankruptcy with Chapter 7 is much cheaper than a Chapter 13 filing. Even when using a bankruptcy attorney, the legal fees for Chapter 7 are noticeably less.

4. A faster fresh start. While all bankruptcies are designed to give you a fresh start, a Chapter 7 filing has more immediate benefits. Some individuals see their credit scores improving in as little as a year since their debts were discharged under 7. Furthermore, you can qualify for a home loan within 2 years. Yes, both Chapters hurt your credit, but the consequences for Chapter 13 don't evaporate as quickly.

5. Protected assets. Most people are worried about their assets when filing for bankruptcy. In a Chapter 13, you will retain possession of your assets. In Chapter 7, that isn't a guarantee, which worries many individuals. However, statistics show than many people do not lose anything - or anything significant - as a result of Chapter 7.

6. Freedom. After filing for bankruptcy, you face both emotional and financial freedom. Once the debts are discharged, you no longer have to worry about harassing phone calls and the emotional stress of what's next. Instead, you can focus your energies on rebuilding your financial health.

7. Eliminated repossession and foreclosure debts. A Chapter 7 can wipe out these loan decencies and other unsecured debt that qualify.

Important Ohio Bankruptcy Exemptions

Anyone thinking about filing for bankruptcy is bombarded by many questions of the unknown. What will happen to my credit? Will I ever get a loan again? Are my assets going to be seized? While all of these are commonly associated with misconceptions about bankruptcy, the good news is that your future after bankruptcy is brighter than before it.

What Is An Exemption

The purpose behind bankruptcy is to eliminate your debt troubles by satisfying debt obligations to creditors. However, there are many instances in which you simply cannot afford to repay what you owe. While some of your debts may be resolved through the sale of personal property, the bankruptcy process is not designed to leave you with nothing. Bankruptcy exemption laws were created to protect much of your essential assets and personal property. There are two types of exemptions, federal and state; each offering a different range of asset protection.

Ohio Exemptions

Each state offers a different level of asset exemption for the value of property. In 2009, the state of Ohio made some important changes to their exemption laws to accommodate for the inflated cost of living. Previously one of the state's lacking much in the way of asset protection, Ohio's laws now are one of the states with exemption laws stronger than the federal exemption protection.

One of the most important exemptions sought after is the homestead exemption, which can protect the equity in your home. This year, Ohio's homestead exemption value increased to $132,900. Compared to the $22,975 offered under the federal exemption, Ohio residents now have a better footing for defending foreclosure in bankruptcy.

Personal property protection was increased to $12,250, matching the current federal exemption value. The motor vehicle value allowance also matches the federal exemption level at $3,675, which was brought up from $3,225 in 2009. Many more of the current Ohio exemptions match or slightly exceed the federal level, a huge leap from years prior where Ohio's values were well below the federal level. These include items such as tools of the trade, cash allowance, and the wildcard item. As usual items such as retirement, veteran, Social Security, insurance or other benefits funds are untouchable in bankruptcy.

Using Exemptions

The specific nature of the bankruptcy process, including exemption laws, is one reason why it is encouraged to seek guidance from a bankruptcy attorney. Only a professional can help you ensure your road to debt relief is a smooth process with minimal impact on your property or hard earned assets.