Bankruptcy 101
How bankruptcy works, in plain terms
Bankruptcy is a federal court process. It gives people who can't pay their debts a legal way to wipe them out or repay them on a schedule they can afford.
The basics
If you live in Northeast Ohio, your case is filed in the U.S. Bankruptcy Court for the Northern District of Ohio, which has a courthouse in downtown Canton. Individuals usually file under one of two chapters of the Bankruptcy Code: Chapter 7 or Chapter 13.
As soon as you file, the automatic stay stops most collection. A trustee is assigned to review your paperwork and, in Chapter 13, to collect your plan payments and pay your creditors.
When the case ends, you receive a discharge. That's a court order releasing you from personal liability for the debts it covers. Those creditors can't collect from you again.
Where cases are heard
Northeast Ohio cases go to the U.S. Bankruptcy Court for the Northern District of Ohio. Stark County cases are heard at the Canton courthouse.
Court links and resourcesSide by side
Chapter 7 and Chapter 13
Chapter 7
Full detailsWhat it does
Erases qualifying unsecured debt
How long
About four months from filing to discharge
Who qualifies
Income under the Ohio median, or passing the means test
Your property
Protected by Ohio exemptions. The trustee can sell property that isn't exempt.
Best for
Credit card, medical, and personal loan debt
Chapter 13
Full detailsWhat it does
Repays some or all of your debt through one monthly plan payment
How long
Three to five years
Who qualifies
People with regular income and debts under the federal limits
Your property
You keep it and pay for it through the plan
Best for
Catching up on a mortgage or car, or protecting property the exemptions don't cover
Debts bankruptcy usually erases
Credit card balances
Medical and hospital bills
Personal and payday loans
Past-due utility bills
What's left owing after a repossession or foreclosure
Some older income taxes
Debts it usually doesn't
Child support and spousal support
Most student loans
Recent income taxes
Court fines and restitution
Debts from injuries caused while driving drunk
Required by law
Two short courses
Before you file
Credit counseling
A course from an agency approved by the U.S. Trustee Program, taken within 180 days before filing. Most people finish it online in an hour or two.
After you file
Debtor education
A second course on budgeting and money management. The court won't grant your discharge until you've finished it.
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