Ohio Bankruptcy Law: Key Terms and What They Mean

Ohio bankruptcy law can be complex, with a variety of terms and definitions that are critical to understanding the process. Whether you are considering filing for bankruptcy or simply want to learn more about the legal framework in Ohio, familiarizing yourself with these key terms is essential.

1. Bankruptcy: This is a legal process that allows individuals or businesses to eliminate or repay their debts under the protection of the federal bankruptcy court. In Ohio, individuals typically file for Chapter 7 or Chapter 13 bankruptcy.

2. Chapter 7 Bankruptcy: Often referred to as "liquidation bankruptcy," Chapter 7 allows individuals to discharge most of their unsecured debts, such as credit card bills and medical expenses. However, certain assets may be sold to pay creditors. In Ohio, many debtors are eligible for Chapter 7 if they pass the means test.

3. Chapter 13 Bankruptcy: Known as "reorganization bankruptcy," Chapter 13 allows individuals to keep their property while repaying their debts over a three to five-year period through a court-approved plan. This option is typically chosen by those who have a steady income and want to avoid foreclosure.

4. Means Test: The means test determines eligibility for Chapter 7 bankruptcy. It compares the debtor’s average monthly income to the median income for a household of the same size in Ohio. If the debtor's income is below the median, they can file for Chapter 7. If it is above, they may have to file for Chapter 13.

5. Discharge: A discharge is the court's order that eliminates the debtor’s personal liability for certain debts, freeing them from the obligation to repay those debts. Not all debts can be discharged, including certain taxes, student loans, and child support payments.

6. Automatic Stay: An automatic stay is a legal provision that halts all collections actions against the debtor once they have filed for bankruptcy. This includes foreclosure, wage garnishments, and harassment by creditors.

7. Creditor: A creditor is an individual or institution that has extended credit or lent money to the debtor. During bankruptcy, creditors must adhere to the rules set forth by the bankruptcy court regarding how debts are to be handled.

8. Bankruptcy Trustee: A bankruptcy trustee is an individual appointed by the court to oversee the bankruptcy case. In Chapter 7, the trustee is responsible for liquidating the debtor’s non-exempt assets to pay creditors, while in Chapter 13, the trustee handles the repayment plan.

9. Exemptions: Ohio law allows debtors to keep certain assets regardless of the bankruptcy filing. These exemptions can protect items like a portion of home equity, a car, personal belongings, and retirement accounts, ensuring that debtors are not left with nothing after bankruptcy.

10. Filing Fee: A filing fee is required when submitting a bankruptcy petition to the court. While the fee may vary depending on the chapter filed, it generally ranges from several hundred dollars. However, individuals facing financial hardship can request a fee waiver.

Understanding these key terms will better prepare you for navigating the Ohio bankruptcy process. It is advisable to consult with a qualified bankruptcy attorney who can provide tailored guidance and support based on your specific situation.