In fact, credit unions almost never agree to this. Experience is a great thing to have. I want whatever is best for you. The post-dated checks many such lenders require to make you a loan also present an issue in bankruptcy. If you are looking for a comprehensive overview of Chapter 13 bankruptcy in Ohio, you have found it. Many people file for bankruptcy due to unaffordable levels of medical debt, divorce, job loss, and other situations beyond their control.
Payday Loans in Bankruptcy: The Bottom Line
Learn what happens to payday loans in bankruptcy, and some special issues regarding these cash advances. For a free consultation with a lawyer about discharging payday loans in Ohio, call Minnillo & Jenkins CO. LPA at Ohio's payday lending law is one of the best in the nation when it comes to protecting consumers. Unfortunately, Ohio's payday lenders have found a loophole in the law, and as a result Ohio residents pay some of the highest payday loan rates in the country. (To learn what payday loans are, how they.
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Your path to a better future starts here. Bold labels are required. I have read the disclaimer. Payday Loans And Bankruptcy Once you fall behind on bills, it may seem like you have no reasonable options.
If you are considering a payday loan, it is almost certainly time to speak with a bankruptcy lawyer about other options. If you have already taken out one or more payday loans, it may be possible to get them discharged by filing Chapter 7 bankruptcy.
If you don't qualify to file Chapter 7, we can help you evaluate whether reorganization of debts in Chapter 13 or some other option will work for you. Contact Us Bold labels are required. My experience is that if you contact your doctor prior to filing bankruptcy and try to make arrangements to make payments on these debts then you will continue to be able to see that doctor.
You should know, however that the doctor is not required to continue to see you — but often they will. If you owe a debt to a doctor, this debt must be listed in your Chapter 13 bankruptcy. You are not permitted to exclude any debts, including your doctor. The doctor is not permitted to try to collect the debt you discharge in bankruptcy but you are permitted to voluntarily pay it. And this is what most of my clients do. The most common kind of debt discharged in a Chapter 13 bankruptcy is credit card debt.
This accounts for more Chapter 13 bankruptcy cases than any other single kind of debt. Personal loans, signature loans, loans not secured by any personal property, are all discharged in a Chapter 7 bankruptcy without any payment whatsoever. Of course, the credit cards and open loan accounts will be closed when you file, but credit cards are so easy to get that this should not be of concern to you.
These are high interest loans and generally these finance companies require you to fill out a form that lists personal property that is used as security for the loan. This is a seldom done, as a practical matter. Unlike Chapter 7, where you have limited options for these kinds of collateral loans, in chapter 13 you are able to keep the property, but you only have to pay the value of the property, in most cases, which is often much less than what you owe.
Because these collateral loans are normally not made for the purpose of purchasing the property that is used as collateral or security they are able to be crammed down in a Chapter However, in chapter 13 you are able to cram down what you owe, in other words, you only have to pay to spring leaf to the value of the car.
By loans are legal in Ohio. And, in fact, the title loan companies do repossess cars. These are probably some of the most dangerous and frustrating loans that I see. Because everyone needs their car for just about everything they do in daily life, the threat of not having the automobile is huge. In chapter 7 cases, we often try to pay these loans off before filing our bankruptcy. But this is often difficult and sometimes impossible. In a Chapter 13 we can pay back the title loan over a period of 36 to 60 months.
In most of the cases that I see, the title loan people are pretty smart. If you have borrowed an amount that exceeds the value of your car then you can cram down the loan just like you can with the collateral loan.
Either way, Chapter 13 is a very effective tool to use against title loans. Even though the Payday Loan company makes you sign documents that seem to indicate that these loans would not be dischargeable in bankruptcy, they are, in fact, dischargeable in a Chapter 13 bankruptcy.
Typically, these payday loan creditors will require payment by automatically deducting the money from your bank account where your paycheck is deposited.
They like to time the payments so that the loan payment comes out very same day your paycheck is deposited. This makes it virtually impossible for you to take the money out of your bank account prior to the automatic payment on the payday loan being made.
Occasionally payday loans are paid by check, typically a post-dated check that the payday loan creditor is supposed to hold and deposit on a certain date. If you try to put a stop payment on these payday loans they are generally successful in avoiding the stop payment and end up getting the money anyway.
There is a particular way that I generally advise my clients to avoid payment on the payday loans that has worked very well.
Of course, once you file a bankruptcy case, you stop making payments on these loans too. In chapter 13, payday loans are treated just like any other unsecured loan, like a credit card, or medical bill.
Once you file your Chapter 13 bankruptcy, the payday loan lender is not permitted to further access your bank account. Probably the number one question I get as a bankruptcy attorney in Dayton Ohio concerns the car. Of course, everybody has to have their automobile get to work, school, the grocery store — practically everywhere. And sometimes pay almost nothing to your creditors in the process. We use the book value as a starting point, but your particular car may be worth more or less than the Kelley blue book or KBB value that you look up online.
In this case, we would want to consider filing a chapter 13 and pay the creditors something to compensate them for the extra value we have in our car and are keeping. A powerful feature of Chapter 13 is the ability to cram down the debt that you owe on automobiles.
Bankruptcy law does not permit you to cram down all car loans, however. The car has to be purchased more than days prior to the filing date of your bankruptcy. This means that we need to be very careful in choosing the filing date.
The car has to be purchased more than days prior to your filing your bankruptcy case. Little details like these make a big difference. As an example, once I had a client come to me in a big hurry to file. His wages were being garnished and he asked me to file his case at once to stop his garnishment. But, I never get in a hurry and fail to do a proper analysis. In many cases, my clients have high interest loans on their automobiles.
Perhaps the automobile is worth close to what they owe on it but their interest rate is By putting the automobile and the bankruptcy they will save thousands of dollars in interest charges.
You want to send it back to the creditor and be done with the car and the debt on the car. In these circumstances, you would buy a car before filing, and although you cannot cram down the car, since the purchase date will be very recent before you file your bankruptcy case, you still get the benefit of changing the intereste rate to 4. Your old car will go back to the creditor, whop will sell it at auction, and the difference is treated like a medical bill or credit card in yoiur chapter Filing bankruptcy will not cause you to lose your apartment lease.
You just continue to make your monthly payment and continue on as normal. If you had a loss of income or divorce or some other setback and you need to get out of a lease that you could no longer afford, Chapter 13 bankruptcy will allow you to move out, break the lease and discharge the remaining payments, including, generally, any damage claims that the landlord might later want to bring against you.
The standard practice for doing this would be to move out of the apartment before you file bankruptcy, and then include the lease debt in a Chapter 13 bankruptcy to be discharged. A very common question and concern everyone has when considering filing Chapter 13 bankruptcy when they are renting is whether or not they will be able to find another apartment to rent.
Fortunately, this turns out to be not a problem at all. Many of my clients who file Chapter 13 bankruptcy own their own homes. In chapter 7, you need to be current in your house payments in order to keep the house. If you are behind, the creditor can request permission to proceed against the house in foreclosure. The bankruptcy does slow down the process but eventually the foreclosure will happen.
You can do the same thing with a chapter 13, but the chapter 13 gives you more options, if you know how to approach it. By filing Chapter 13 bankruptcy, you can stop a foreclosure and the Chapter 13 plan will give you 3 to 5 years to catch up all of your missed payments. In fact, this is one of the major reasons why people will file Chapter When you get three months behind on your house, your mortgage company will typically refer your mortgage out to a law firm to sue you for foreclosure.
All that matters is that we actually file your case prior to the scheduled sale date. There are so many advantages to using Chapter 13 when it comes to mortgage debt. Also, you can remove judgment liens that may have been attached to your house because you were sued.
So now, your house could be worth far less. This often provides us with an opportunity to strip off second mortgages. You could file a Chapter 13 with your initial stated intent to be to keep the house. You can see how that works with your budget, and if everything works out as planned and you still want to keep the house, then your Chapter 13 will do just that for you.
Maybe you change jobs or you get transferred or divorced. With Chapter 13 you are not locked into your decision. You can file your plan to keep the house, and if it works out fine — but if you change your mind I can modify your plan to drop the house out of the plan and discharge the deficiency. This way, when you end your Chapter 13 and get a discharge of all your debt, the house deficiency will be discharged as well.
And, if you do change your mind in the middle of the plan, you still are able to live in the house for a period of months while the foreclosure is taking place. This interest in real estate is protected by the residential real estate exemption. Chapter 13 provides you with several options if you are purchasing your home on a land contract or if you are selling well. Often, if you are purchasing a home on the land contract, the contract will require that you pay the full purchase price only a few years after you enter the contract.
This is called a baloon payment. With Chapter 13, it is possible to extend the time within which you must pay off this contract by up to five years.
Of course, you still have to pay the total amount due and may be difficult to obtain financing a Chapter 13 but it is possible and we have done this on several occasions. Therefore, if you are selling a house on land contract later on you are entitled to receive money because of a land contract — the money that you would receive on a land contract could be lost in a Chapter 7. Therefore, you might want to consider filing a chapter 13, which would give you more options to deal with the contract than are available in a chapter 7.
Credit unions deserve special mention. Credit unions provide car loans, sometimes mortgage loans, credit cards, personal loans and frequently the credit union is the only banking institution that families may use. The difficulty that sometimes arises with a credit union when you file a Chapter 7 bankruptcy is the concept of cross collateralization.
So if you have a car loan, credit card, and a personal loan, then all of these loans are generally going to be secured by your car. So, if you get behind on your credit card payment — surprise! I only missed my credit card payment! My car payment is current! The credit union then explains, often for the first time, that the credit card is secured by the car, personal loan is secured by the car, and if any of these payments become late they have the right to take money out of your bank account, checking, savings, without warning and repossess the car.
And, they frequently do all of this at the same time causing you to bounce checks and have to pay repossession fees. Cross-collateralization frequently causes problems in a Chapter 7 bankruptcy. This is because often you will have a credit card, a personal loan, and the car that you want to keep in a bankruptcy but you want to discharge with no payment the credit card and personal loan while keeping the car. The credit union will often not agree to this.
In fact, credit unions almost never agree to this. The credit union will not agree to allow you to keep the car, unless you also agree to pay back the balance on the credit card and personal loan. Often the amount owed on the credit card personal loan and car loan far far exceed the value of the car.
Chapter 13 offers you a great way to deal with the problem of cross-collateralization. So, for example, if you have an automobile loan, a credit card, a personal loan with a credit union, you can actually keep the car and only pay the credit union the value of the car.
Often the total amount owed to the credit union for car loan, credit card and personal loan far exceed the value of the car. In a Chapter 7, you have to agree to pay the entire amount owed to the credit union if you want to keep the car. In Chapter 13 — this is not the case. If you have a cosigner, typically a family member, you, and your co-signer need to understand that the cosigner has only limited protection in a chapter 13 bankruptcy, in most cases.
If you are keeping the collateral on a secured debt cosigned by someone, they are still liable for a portion of the debt which is discharged in your chapter This can be a complex problem and one best left to a very experienced chapter 13 bankruptcy attorney.
Sometime you are the cosigner for a debt that is being paid by someone else. For example, you may have cosigned for a child who needed a cosigner for a car and the child is paying for and driving the car. There are special plan provisions we use to take care of these situations. They are not uncommon but must be properly handled so everything goes smoothly and the cosigner is not affected. Cosigners are required to be listed in your bankruptcy and will be notified by the bankruptcy court.
Past-due utilities are discharged in chapter These are unsecured debts and are discharged just like a medical bill or credit card.
Sometimes the utility company will make you pay a security deposit just as if you are a new customer. If you have a security deposit on file when you file the bankruptcy, the utility is permitted to keep that security deposit and apply it to the balance that you owe when you file. Sometimes your utilities are not behind, but yet the utility company may still discharge the unpaid balance that you owe on the date of filing. This is not done in every case but technically the utility company is correct in doing this.
For example, if your utility bill is due on the 30th and you file a bankruptcy on the 15th, approximate one half of your monthly utility bill would actually be dischargeable in bankruptcy. Generally, student loans are not discharged in bankruptcy. This is true of both federal and private student loans. It is technically possible to discharge student loans in bankruptcy but it is very difficult. You essentially have to show that you cannot now and probably never will be able to in the foreseeable future pay all or a significant portion of your student loan debt.
The way I like to explain the difficulty involved in discharging student loans in bankruptcy is like this: The reason is because you were able to walk into the courtroom to make the argument in the first place. Student loans are guaranteed by the Government. Essentially you are suing the United States of America and the success rate for these kinds of cases is very low.
Sometimes we have to file Chapter 13 just to obtain protection from these kinds of student loan creditors for three to five years, hoping that your income will increase and that the combination of increased income and discharge of other debt will put you in a position where you will be able to make payments on the non-dischargeable private student loans.
In some chapter 13 cases, we have situations where the majority of the debt someone has is student loan debt, not discharged, but also considerable credit card and medical debt. In these cases, chapter 13 provides a very effective way to pay what you can afford, most of the money goes to the student loans, which you cannot discharge, a smaller percentage will go to pay the credit card and medical bills.
What is left unpaid on the student loans at the end of the plan is still there at the end of the chapter 13, but the balance owed on the medical bills and credit card debt is gone forever. Any car debts are paid in full, and then you are usually in a better position to get into a payment plan on the balance left on your student loans.
Rent to own debts are dischargeable in bankruptcy. However the contracts for these rent to own generally require that the property be returned to the rent to own creditor if you discharge the debt. These are generally very bad deals for consumers and I almost universally advise against reaffirming or keeping rent to own debt. In these limited situations we generally will use a special plan provision in the chapter 13 bankruptcy to keep the the rent to own property and continue to pay until the contract is completed.
Tax refunds have limited protection in a Chapter 13 bankruptcy. The amount of the tax refund that is subject to the bankruptcy is determined by the date the case is filed. It is not determined by the date you get a refund. And, tax refunds get examined each year in a chapter 13, since the plans run for 3 to 5 years. So, it makes sense to adjust your withholding to minimize the refund, and that way you will get to keep it. And this is true. In fact, in those situations where there is value in property that would be a problem in chapter 7, filing a chapter 13 is just the thing to solve this problem.
You get to pay a reduced amount to compensate the creditors for the property you keep, and you get to pay the reduced amount over 3 to 5 years, at no interest. Most of the stuff that anybody owns has very little, if any, practical resale value. The test is what is the resale value in its current used condition. Therefore, it is almost always the case that everything that we own is fully protected in a bankruptcy.
Some property is not protected in bankruptcy. For example, if you have stocks and bonds, they generally are not going to be protected. A common example of this is employee stocks. Another situation that frequently causes problems for people is when, as part of estate planning for parents, real estate is put into their names.
The equity is totally unprotected if the son chooses to file Chapter 7 bankruptcy. This is definitely one of them. This is a situation that is difficult to deal with and requires extensive planning and order to get the best result. There are some things that can be done to keep property that would otherwise be lost.