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The attorneys at Groth & Associates provide counseling from filing to the end of the bankruptcy process. They will help you organize your debts so that you can file the type of bankruptcy that is best for your needs. Some common questions are following. If you still have questions, please contact Groth & Associates.

What is bankruptcy?

Bankruptcy is a legal proceeding in which an individual who cannot pay his or her bills can get a fresh financial start. The right to file for bankruptcy is provided by federal law, and all bankruptcy cases are handled in federal court. Filing bankruptcy immediately stops all of your creditors from seeking to collect debts from you, at least until your debts are sorted out according to the law.

What can bankruptcy do for me?

Bankruptcy may make it possible for you to eliminate the legal obligation to pay most or all of your debts (known as discharge), stop foreclosure on your home and allow you an opportunity to catch up on missed payments, prevent repossession of a car or other property, or force the creditor to return property even after it has been repossessed, and stop wage garnishment, debt collection harassment, and similar creditor actions to collect a debt.

What doesn't bankruptcy do?

Bankruptcy cannot cure every financial problem. Nor is it the right step for every individual. In bankruptcy, it is usually not possible to eliminate certain rights of "secured" creditors. A "secured" creditor has taken a mortgage or other lien on property as collateral for the loan. Bankruptcy also does not discharge types of debts singled out by the bankruptcy law for special treatment, such as child support, spousal support, certain other debts related to divorce, some student loans, court restitution orders, criminal fines, and some taxes. Nor does bankruptcy protect cosigners on your debts. When a relative or friend has co-signed a loan, and the consumer discharges the loan in bankruptcy, the cosigner may still have to repay all or part of the loan.

What different types of bankruptcy should I consider?

There are four types of bankruptcy cases provided under the law: Chapter 7 is known as "straight" bankruptcy or "liquidation." It requires a debtor to give up property, which exceeds certain limits called "exemptions", so the property can be sold to pay creditors. Businesses and a few individual debtors whose debts are very large use chapter 11, known as “reorganization”. Chapter 12 is reserved for family farmers. Finally, Chapter 13 is called "debt adjustment". It requires a debtor to file a plan to pay debts (or parts of debts) from current income. Most people filing bankruptcy will want to file under either chapter 7 or chapter 13. Either type of case may be filed individually or by a married couple filing jointly.