What is a Chapter 7 bankruptcy?
Chapter 7 is probably what most people think of when they hear the word bankruptcy. Chapter 7 is also called liquidation, and for most consumers the case is completed within a few months after filing with the Court. All of the Debtor's property is evaluated and any property or possession that is not otherwise exempt is sold by the Trustee to pay creditors.
Does that mean we could lose everything?
Generally not. Remember, one of the policies for bankruptcy in the first place is to give you a FRESH START; and you cannot get a fresh start if you lose everything. The law protects different amounts of valuation in different types of property, by way of exemptions. Only if the particular property in question is worth more than the relevant exemption would a Trustee consider liquidating it. In addition, if the property already has a lien (such as a mortgage or a car loan) they are usually exempt or otherwise protected anyway.
Are all the debts discharged in bankruptcy?
While most debts are dischargeable, some debts are not. For example, it may come as no surprise that back taxes and domestic support obligations are generally not discharged, as well as most student loans.
In a Chapter 13, also called a wage earner bankruptcy, the debts are paid over 3 or 5 years. Briefly stated, the debtor pays the Trustee each month and the Trustee pays the creditors according to the Chapter 13 Plan that is developed by the debtor and the debtor's attorney. The creditors may be paid all they are owed, or just a fraction. Upon completion of the case, the debts are discharged, even if the creditor has only been paid a percentage. A Chapter 13 bankruptcy is preferable to a Chapter 7 if the debtor owns property that would be at risk of liquidation.
I do not really own that much, so why should I get a Will?
Everyone should have a Will. In your Will you determine who will get your estate (even if that is only your favorite motorcycle or comic book collection). If there is no Will, then your estate passes according to the laws of Ohio, generally to next of kin.
What kind of things should I have ready when I discuss a Will?
You should consider who you want to be the Executor of the Will, and generally, it is a good idea to have a person who can act as a back-up or contingent Executor if the first person named is unable to serve for some reason. If you have minor children, then you want to have someone in mind to serve as the appointed Guardian if something should happen to your spouse. You might also consider if you want to have specific bequests made in the Will. If you own real estate, you should have a copy of your deed with you to discuss ways to avoid Probate proceedings altogether.