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Dayton, Ohio Bankruptcy Attorneys - Cope Law Offices

Dayton Bankruptcy Attorney Personalized Debt Relief Solutions If you are overwhelmed by debt, you may feel as though no one can help you. However, there is help available, and the sooner you take advantage of it, the sooner you will find debt relief solutions. Speaking with a knowledgeable bankruptcy attorney is an easy first step …

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Ohio Is One Of The Top 10 States For Bankruptcy Filings – Why?

Ohio One Of Top In Nation For Bankruptcy FilingsThe number of bankruptcy filings fluctuates over time. For example, filings went way up around the 2008 financial crisis and has slowly dropped off as the economy recovers, It also varies by geographic location; some areas struggle more financially than others or face seasonal financial issues. States in the south generally have higher rates of bankruptcy filings – residents there have historically had lower credit scores and the entire area struggles more financially than other parts of the country.

This year, Ohio’s bankruptcy rates come as something of a surprise – we’re in the top 10 for the highest percentage of bankruptcy filings in the country.

Ohio Bankruptcy Statistics In 2016

In a recent study, Nerdwallet analyzed bankruptcy filings in each state between April of 2015 and March of 2016. They found that the median bankruptcy rate across the country is 224 per 100,000 people – Ohio has 322 filings per 100,000 people. That made for a total of 37,402 personal bankruptcies in Ohio over that year.

The study also tracked bankruptcy filings at a smaller scale, analyzing the number of filings in counties with populations greater than 100,000 people. In Ohio, Cuyahoga County had the most filings out of any of the measured counties in Ohio – 444 per 100,000 people. That puts it at 53rd out of the 587 counties in the country with more than 100,000 residents. Three other Ohio counties were among the top 100: Summit with 407 per 100,000 people, Mahoning with 407, and Montgomery with 392 – that means Dayton.

Ohio isn’t alone in the midwest – Illinois and Indiana also make the top 10 states with the most filings. Otherwise, 6 of the top 10 are in the South and Utah rounds out the set.

Why Are There So Many Bankruptcies In Ohio?

Everyone was hit hard by the Great Recession, and the Midwest took a particularly big hit. The region has also recovered more slowly than other areas of the country. Ohio still has an unemployment rate that’s slightly higher than the national rate – 5% vs. 4.9%. And Ohio’s median income is lower than the national median – $48,849 vs. $53,482.

In other words, the Ohio economy is still lagging a bit behind the national economy. We’re still recovering from 2008 and a slow manufacturing sector have caused further economic troubles. In addition, Ohio has low population growth, which makes for weaker growth of the economy.

The good news is that Ohio is growing faster than any other state in the Midwest – the economy grew by 2.1% in 2014, compared to the US growth rate of 2.2%.

What Should I Do If I’m Struggling With Debt?

The good news is that you’re not alone. Lots of us here in Ohio have a hard time paying the bills – sometimes there just isn’t enough money to go around. And there are lots of steps you can take to make your finances more manageable.

First, it’s a good idea to reach out to your creditors if you’re struggling. They would much rather have you keep paying than go through the trouble of suing you for collection, repossessing your property, or foreclosing. Let them know that you’re having financial troubles and ask them what your options are for making your payments easier – a lower interest rate or a deferment on a couple of a payments, for example. You may even be able to settle your debt by offering a lump sum payment for less than you owe. This goes for your mortgage and auto debt, credit card debt, and medical debt.

If you’re struggling with student loan debt, you also have lots of options for making payment easier. The federal government offers a number of repayment plans based on your income and you can switch to one of those plans at any time, as long as your account is current. So if you know you’re going to fall behind, that’s something you should address right away.

Finally, you may want to consider a bankruptcy. As you can see, lots of people end up needing that financial protection. We all struggled through 2008 and sometimes it takes a serious move to get back on your feet. Bankruptcy can wipe out your unsecured debts and you’ll often be able to keep all of your property – it’s a powerful tool for resetting your finances.

The Bottom Line

Ohio is struggling to catch up with the rest of the country, but we’re going to get there. We’re a great state full of honest, hardworking people and we’ll continue to grow and prosper. We were hit hard in 2008 and that means many of us will need some help getting all the way back onto our feet – that’s why the bankruptcy laws exist. If you’re struggling with debt, please don’t hesitate to reach out for a free consultation to learn about your options for dealing with it.

 

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Budgeting Basics: Keep Your Wallet Happy

Budgeting TipsIn our hectic lives, it seems like there’s never quite enough time or money. There’s no way to squeeze more hours into a day, but there is a way to squeeze more bang out of your buck (and put some away for a rainy day). And it just takes a few simple steps. Here’s how to get started creating your budget:

What Comes In, What Goes Out

First, you’ll need to know how much money you’re bringing in. That means your paycheck, any benefits you receive, child or spousal support, and any other money coming into your house. If your income isn’t always steady, try to make a conservative estimate – on the lower end of what you usually make.

Next, you’ll need to know how much money can go out, and to where. Try breaking up your expenses into a handful of categories. The categories may be different depending on your family’s needs, but try to keep it down to half a dozen or fewer for the sake of simplicity. For example, you might split things into:

  • rent/mortgage and utilities
  • groceries
  • credit card and debt payments
  • household goods
  • entertainment
  • savings

Next make a list of the purchases that fall under each category. In the top one, that might be your rent or mortgage payment, electric bill, gas bill, water bill (if applicable), cable bill, and phone bill. For groceries, you may want to make a list of your monthly or weekly food purchases so you know how much you spend. Some of these categories will be fixed, like rent, while others have some wiggle room. Start with the fixed ones and then move on to work out how much you can afford to spend on the others.

Now you can look at the money you have coming in and the money you have going out, side by side. You may find that you’re spending more than you think on certain items, which gives you room to cut back and save more.

Use The Envelope Method

After you have determined what you want to spend in each category, use the famous envelope method to keep you on track. Even though having a debit card makes it quite easy to get about your day, it can also make it all too easy to overspend. The envelope method means you only use cash, so you’re never going to overdraw your account.

Here’s how it works: you take out all the money you need in cash at the beginning of the month. Make an envelope for each of your major expense categories and put the appropriate amount of cash in each one. Now that money is allocated to where it needs to go ahead of time, making it easy to stick to the budget.

If you have extra funds in any of the envelopes at the end of the month, you can roll that forward into a future month, add it to your savings account, or give it to charity.

You may also consider putting in an envelope for a big goal – a car, a down payment on a house, or a vacation. You can allot a certain amount of money to that envelope every month and you can put any extra from other envelopes in there, too. That gives you a little boost of motivation to keep your expenses as low as possible.

Try An App

The envelop method is a great because it takes away the risk of overdrawing your debit card or overextending yourself on your credit card, but your entire budgeting process doesn’t have to be done on paper. There are a number of apps and programs out there to help you manage your budget. Many of them will let you input your income and expenses and will come up with suggestions for how much to spend on each category. Those programs can also flag places where your expenses may be out of whack before you notice, making it easier to fix them.

Give It Time

Practice makes perfect – learning to make and stick to a budget takes time. So start slowly, with reasonable goals, and remember to celebrate your achievements as you master the art of budgeting. No budget is perfect and sometimes you’ll end up off track, but that’s ok! Give yourself some time to figure out how to make your budget work for you – your wallet will thank you.

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Should I use my retirement savings to pay down debts in Ohio?

Should You Use Your Retirement Savings to Pay Off Debt?

When you’re in a financial bind, it can be tempting to think about all of the assets you have and how you can use them to support you in the short term. This is especially true if you’re receiving harassing phone calls from creditors.

Making the Creditor Calls Stop: Should I Use My Retirement Funds?

Perhaps a creditor has convinced you that getting started on a payment plan can allow you to get back on track, and desperate to stop the phone calls, you consider pulling some funds out of your retirement account in order to make that first payment.

You might come across the idea of using your retirement accounts and borrowing against them in order to pay off debts innocently, but you need to realize all the potential implications of moving forward with this. This can be really tempting when you’re facing a financial struggle and it feels like you have no options.

Exemptions in Bankruptcy

If you’re in a financial bind, you might be thinking that you’ll have to give everything up if you eventually file bankruptcy. It is true that if you do have assets and you decide to file bankruptcy, some of these may be used to pay off creditors. What’s important for you to research ahead of time, however, are whether you can use any exemptions. It is not true that the bankruptcy trustee can take everything you own out from under you in order to pay down creditors. Although certain pieces of property are accessible through the bankruptcy court, both federal and state laws may protect certain items or accounts, including your retirement accounts.

Retirement accounts are almost always exempt in a personal bankruptcy case. This means you can file a case, discharge debt, and emerge on the other side with your retirement intact.

What Happens to My Retirement Funds in Bankruptcy?

Years spent building up your retirement savings, however, can easily fall apart if you attempt to cash out of a retirement account. This option can be even more tempting if you have recently lost your job and you have the option of rolling over your IRA to a new job or pulling the funds out. Bear in mind that there are also potential tax consequences of withdrawing the money from an IRA so you should always speak to your accountant first before doing this. You should weigh down how much you might be able to earn by keeping the money invested in an IRA against the cost associated with carrying credit card debt.

Reasons to Leave Your Retirement Funds Untouched

Taking money out of your retirement fund in order to pay down debt can also lead to other negative consequences. For example, if you pull the funds out of your retirement fund in order to get a creditor off your back, this seems like it addresses the issue in the short term but it can actually cause more problems down the road.

For example, if you are in so much debt that you are unable to get on top of the matter or if you withdraw so much out of your retirement account that you are facing tax penalties or other fees, you may find yourself worse off than you were before.

Another major benefit of leaving the funds inside your retirement account is that these funds are almost always protected in the form of bankruptcy exemptions. This means that even if you ultimately do need to file bankruptcy, your retirement funds will stay intact, giving you peace of mind that you will have access to those funds in the future even if you have to give up other assets in the discharge process. As you can see, there are significant costs associated with using your retirement funds in order to pay down debts.

It is generally not a good idea.

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How to negotiate with your mortgage loan servicer

If you fall behind on your mortgage or other significant financial obligations, one of the first important steps you can take is to talk to the lender about your situation. There are several different things you need to have ready in order to do that. If you’re having trouble making the payments, contacting the lender sooner rather than later will give you the most possible options. Many loan servicers (organizations who look after your loan) have expanded options available to borrowers and it’s worth calling the servicer to ask, even if your request has been turned down previously.

Servicers are receiving plenty of calls, so be persistent and patient if you’re not able to reach your servicer on the first try. There are multiple options available to individuals who are struggling to make their mortgage payment.

Making Home Affordable Program

You may qualify, for example, for a loan modification under the ‘Making Home Affordable‘ modification program if you meet the following criteria:

You obtained your mortgage before January 1, 2009, you owe a less than $729,750 on your first mortgage, your home is your primary residence, you can’t afford your mortgage payment due to a financial hardship like medical bills or a job loss and your payment on your first mortgage is more than 31% of your current gross income.

In the event that you meet these qualifications, contact your service provider. Some of the information you will need to provide to your loan servicer should be prepared before you call the loan servicer directly. This includes:

  • Your most recent tax return
  • Your mortgage statement
  • Details about your savings and other assets
  • The before-tax income of your household
  • Account balances and minimum monthly payments and credit cards
  • A hardship affidavit explaining your circumstances
  • Monthly payments on other debts like car loans or student loans

Tips and Options for Avoiding Default and Foreclosure

If you are not eligible for the “Making Home Affordable” modification program, you still may have other options to protect your house. If you’ve fallen behind on your payments, there are multiple foreclosure prevention options with a loan servicer. These include:

  • Forbearance, in which your mortgage payments are suspended or reduced for a period you and your servicer agree to. At the conclusion of this time, you must begin making your regular payments in addition to a lump sum payment, or partial payments, for a number of months in order to bring the loan current again. This could be an option if you have suffered a temporary loss of your income like you might experience if you suffered a disability and are currently unable to work.
  • Repayment plan. In this option your servicer gives you a fixed amount of time in order to repay the amount you are behind. The mortgage arrearages are added to your regular payments, and spread out over time. This could be an option if you have missed only a few payments. Keep in mind that Chapter 13 bankruptcy may be a better option in this scenario.
  • Reinstatement. If the problem paying your mortgage is temporary, you may wish to pursue reinstatement. This means you would pay the loan servicer the past due amount plus any penalties and late fees by a date you both can agree to. This would be a lump sum payment, paid all at once, to bring the loan current.
  • Selling your home. Depending on the specifics of the real estate market in your geographic area, you may be able to sell your home to give you some of the funds you need to pay off the mortgage in full. Some lenders will allow for a short sale, where the home’s sale price will not satisfy the mortgage, i.e., you are “underwater” on your home.
  • Loan modification. In this situation you and your loan servicer agree to permanently change one or more of the terms of the mortgage contract to make the payments easier for you to keep up with. This could mean extending the term of the loan, adding this payment to the loan balance or reducing the interest rate.
  • Personal bankruptcy may be considered a last resort option. However, it can be a good opportunity for you to start afresh if you are overwhelmed with the prospect of trying to get caught up. A bankruptcy will show up on your credit report, however, many people we work with are able to regain good credit within a couple years. It’s also important to keep in mind that a period of delinquency will usually already have harmed your credit. When a credit score has already taken a hit, there is very little downside to filing for bankruptcy.

Before throwing in the towel and giving up, make sure you reach out to your loan servicer to get more information. It’s unlikely that you’re the first or last person to request these details and there are probably many programs available to help you. You never know until you ask. You may be able to avoid more serious actions like foreclosure simply by asking your loan servicer if alternatives are available. Getting back on track and being able to make a deal with the loan servicer can relieve some short-term pressure and help you keep your house, too.

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Payday Mayday – No More Google Ads For Payday Loans

Google Bans Payday Loan AdsIf you’ve ever been on the internet and seen a payday loan ad, Google has a hand in making that practice come to an end. Payday loan agencies offer small loans, usually a few hundred to a few thousand dollars, borrowed against your next paycheck. Interest rates can be sky-high and often trap people in a constant cycle of debt. They’re banned from operating in many states, but they can still find customers online – mostly through online advertising.

Google recently announced, however, that all payday loans ads will be banned from the site as a result of reactions to advocates who believe that the payday loan practice exploits vulnerable and poor individuals by giving them upfront cash but not clearly informing borrowers of the true cost of the loan. Any lender who charges annual interest rates of 36% or higher in the United States will be forbidden from placing an ad on Google’s network.

What Google’s Decision Means for the Financial Industry

This is the first situation in which Google has announced any worldwide ban on types of ads for financial products. The majority of prohibited advertisements on Google to this date include largely illegal activities like selling drugs, explosives, and guns, and the search engine giant has cracked down on ads that are graphic or sexually explicit in nature.

The payday loan industry finds plenty of customers on the internet, but advocates of the move hope that it will help prevent vulnerable and low income individuals from being taken advantage of. The move is an important first step for major tech companies who have to take a stand and weigh in on major policy issues of the day.

Facebook has also banned payday loans but other companies, including Yahoo!, still allow them. And consumers will still be able to find payday lenders by searching for them. However, advocates feel this is an important step in making payday loans less attractive and less available to vulnerable consumers.

Why Did They Do It?

Like much of the tech industry, Google want to use its influence to discourage practices they believe are harmful in order to protect consumers – they don’t want to encourage the payday loan industry. Hopefully, this move sends a message about the dangers of payday loans and makes consumers less likely to pursue them. Google has also been under plenty of pressure from advocates to ban these kinds of ads.

Payday lenders have been in the hot seat recently with more than just Google. Regulators and legislators have continued to attempt to limit their activities, including capping total loan amounts and interested rates. As mentioned above, some states have completely banned it. The Consumer Financial Protection Bureau is also working on putting together a rule affecting the payday lending industry – they want to require verification of the consumer’s income and borrowing history and would cap the number of times the loan could roll over. They also want to require that those advertising financial products online state the annual interest rate and the length of the loan right on the ad.

But this governmental activity hasn’t stopped payday lending. Some believe that Google and Facebook’s moves will actually be more effective; so many consumers were seeing those ads and now they’re gone. They’re much less likely to learn that payday loans are available in the first place.

Payday Lending Industry Responds

Payday loan industry officials believe that the move is discriminatory, stating that some consumers need access to these products. Borrowers often reach out to payday loan services in order to get cash quickly between paychecks with the intention of paying the balance on the next payday and may not have other easy access to cash. However, it can be difficult to get out of the borrowing cycle when the fees mount quickly and interest rates can be in the triple digits. Given the fact that many individuals turn to the internet first in order to search for their options, someone in a pinch may be tempted to make use of a payday lender without realizing the significant financial consequences.

Don’t Get Stuck In Payday Debt

At the end of the day, payday loans are very dangerous for vulnerable consumers. With sky-high interest rates and fees, they’re more likely to trap you in debt than solve your cash shortage problem. If you’re struggling to make ends meet, consider seeking out your local community support organization for help.

 

 

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Income Guidelines to Qualify for Chapter 7 Bankruptcy in Ohio

Ohio Chapter 7 Means TestUpdated June 1, 2016. 

There’s no way around it – dealing with debt is just plain hard. But there are a number of ways to handle it and get your financial health back on track. One of those ways is bankruptcy. It allows you to wipe out your debts and start over fresh. It’s not an easy decision to make and it’s not right for everyone, but it can really make a difference in the amount of debt you have to deal with. You may even end up debt free!

One of the first questions you need to tackle when filing for bankruptcy is whether to file under Chapter 7 or Chapter 13. Under Chapter 13, you’ll work with the bankruptcy trustee to create payment plan for the next five years, after which your remaining unsecured debt will be discharged. You’ll also have to repay your secured debt up to the value of the collateral. Chapter 7 bankruptcy is commonly referred to as “liquidation.” In Chapter 7, the bankruptcy trustee will liquidate, or sell, your non-exempt assets to pay back your creditors.

If you have large amounts of unsecured debt and few assets, you might want to file for Chapter 7. However, the court wants to ensure that only those truly in need of Chapter 7 relief file under that chapter. If you can pay back your creditors in a meaningful way, Chapter 7 is not for you. In other words, you may make too much money to file under Chapter 7. The court will make that decision based on the “means test.”

Step One: Median Income Comparison

The first step of the means test compares your average monthly income over the last six months to the median income in your state. For cases filed after May 1, 2016, the median income for a single earner in Ohio is $44,849 per year, or $3,737 per month. For a 2-person household, it’s $55,771 per year, or $4,648 per month. For larger households, check this chart on the Department of Justice’s website for official median income information.

Now, add up your income over the last six months and divide it by six. If the result is less than $3,737, you qualify for Chapter 7 bankruptcy. If not, you must continue to the next step of the means test.

If you earned more than the median income in your state for the six months prior to filing for bankruptcy, the court is concerned that you might actually be able to pay some of your debts, making liquidation unnecessary and unfair to creditors. To prove that you do, in fact, need to file under Chapter 7, you’ll need to show that you don’t have enough disposable income to make payments under Chapter 13.

Step Two: Disposable Income

Start with your average monthly income from the first step. You’ll subtract your allowable expenses to find your disposable income. Allowable expenses are based on national standards for living, health care, and car ownership costs and local standards for housing and transportation costs. For a single person, national standards allow $570 per month in living expenses for food, housekeeping supplies, apparel and services, personal care products and services, and miscellaneous expenses. That’s further broken down into $307 for food, $30 for housekeeping supplies, $80 for apparel and services, $34 for personal products, and $119 for miscellaneous expenses. A single person under the age of 65 can also deduct $54 for out-of-pocket medical costs and a single person over 65 can deduct $130. For larger families, you can find the allowed living expenses here.

For a single person in Miami County with a mortgage and a car, you can deduct $740 for your mortgage or rent and $457 for other housing expenses, like property taxes and maintenance.  and $226 for vehicle operating costs. Here’s the data for other counties and larger families.

You can also take out a deduction for the cost of a car. It’s $471 for a single car and $942 for two cars. If you have one car, you can deduct an additional $191 for the associated expenses; the deduction for two cars is $382. That’s meant to cover things like gas and insurance.

Finally, you can deduct payroll taxes, childcare expenses, court-ordered payments, and certain insurance expenses.

Step Three: Disposable Income and Unsecured Debt

Take your monthly disposable income from the first step and multiply it by 60. This figure represents the total amount you could pay to creditors through a Chapter 13 plan. Then, add up all of your unsecured, non-priority debt (credit card debt, medical debt, etc.). Divide the total by four; this is the court’s standard for significant repayment of your creditors. If the first number is less than the second, meaning that you will not have enough disposable income to repay 25% of your unsecured debt over 5 years, you qualify for Chapter 7. If you will have enough to pay the 25%, you’ll have to file under Chapter 13.

Totality of the Circumstances

Calculations aside, the court may examine your Chapter 7 filing by evaluating the totality of the circumstances surrounding your case. For example, you may drive a luxury car and live in big loft downtown; you might qualify for Chapter 7 by the numbers but you don’t actually need it. The court will probably require you to file under Chapter 13 in that situation. On the other hand, you may have more than $207 in official monthly disposable income and still demonstrate your need for Chapter 7 bankruptcy (due to a family or health matter, for example). In that case the court will allow you to file under Chapter 7 even if you fail the means test by the numbers.

Filing for bankruptcy is complex and you don’t want to make any mistakes. Check out an online means test calculator to see if you might be eligible for Chapter 7 bankruptcy. Before you file, talk to an experienced attorney to make sure you’re filing the right way.

 

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