Consumer Bankruptcy in Northeast Ohio

Ch. 7 and 13 Consumer Bankruptcy

Chapter 7 Bankruptcy

If you are being sued, a chapter 7 will enact the ‘automatic stay’ meaning any lawsuit pending or able to be filed ceases or cannot be filed while you are in bankruptcy. If the debt that is the subject of the lawsuit is dischargeable then the suit will ‘go away’ with the discharge. This can be especially effective if your license has been suspended due to a suit for accident claims. The day you file for bankruptcy, if you can pay the reinstatement fees, you can get your driver’s license back.

A chapter 7 lasts about 90 days from the date of filing to discharge and final decree. The exceptions to that are if there are assets the equity of which must be paid to the court for instance.

Chapter 13 Bankruptcy

Chapter 13 is essentially a court-ordered debt settlement plan. It can last from 3-5 years during which time you pay your secured debt, any arrearages (back payments), and a percentage of what is owed to your unsecured creditors. When you file a chapter 13 a plan is created with you and your attorney and presented to your creditors and the court. If the plan is confirmed, at a court hearing, then you continue paying on the plan until it is completed – anywhere from 3-5 years. If you are not paying your unsecured debt back at 100% when you complete the plan the percentage you did not pay back is discharged.

There are many options that a chapter 13 offers that a chapter 7 doesn’t. These include ‘catching’ up on car and house payments, paying and or discharging some obligations from a divorce, making tax payments to name a few. The options should be carefully discussed with your attorney to make sure that you are getting the maximum benefit from a chapter 13 filing.

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