Going deeper into debt before filing bankruptcy
As a Columbus, Ohio Bankruptcy Attorney, I consistently see people who are facing debt problems putting themselves into a worse situation by not considering all options. This includes getting deeper into debt before considering filing for bankruptcy protection. This can lead to added stress, maxing out credit cards, borrowing from friends, skipping mortgage payments, missing student loan payments, taking loans against or selling your real property, and many other activities that are part of the viscous debt cycle.Just can’t get ahead of credit card debt
Frequently we will see clients who have been juggling debts just to keep their heads above water. Pay one credit card and borrow or heavily use another. This pattern often leads to over-the-limit penalties, late penalties, and default credit card interest rates that can be in the twenty to thirty percent range. By adding interest and penalties to the already large amount owed to the credit card companies, debt can increase every month, even when spending is decreased.
Don’t Cash in Insurance or Retirement Accounts
In an attempt to stay financially afloat it may seem like taking loans from or cash withdrawals from Life Insurance policies and retirement plans could be a way out of debt. Although, there are several important considerations that should be taken into account before utilizing retirement accounts. Some considerations include the possible tax consequences and penalties of early withdrawals. One of the most significant factors is whether or not early utilization of retirement accounts will actually end the debt problems or just delay filing bankruptcy. It is important to note that most life insurance and retirements accounts are protected in a bankruptcy. Therefore, you can usually keep the cash value of your life insurance and keep your retirement accounts when filing bankruptcy. All too often we see individuals and families come in to file bankruptcy after depleting accounts that they would have been able to keep through the Ohio bankruptcy filing.Keeping your assets through a bankruptcy
Consumer bankruptcy protection laws allow for retention of certain assets. Additionally, there are multiple Federal and Ohio bankruptcy exemptions which can be utilized to help you keep cash, keep your car, and keep other personal property. The decision to file chapter 7 bankruptcy or chapter 13 bankruptcy in Ohio is often impacted by items that clients wish to keep. In addition to Federal bankruptcy exemptions, a few of the Ohio bankruptcy exemptions include:- Ohio Cash Exemption
- Ohio Wildcard Exemption
- Ohio Exemption for the Earned Income Tax Credit
- Ohio Exemption for the Additional Child Tax Credit
- Ohio Motor Vehicle Exemption
