Life During Bankruptcy

The decision to file for bankruptcy can be intimidating, but if you’re drowning in debt it could be the best option for you. The court may discharge some of your debts and ultimately help you get your life back on track so you can work on your financial health. This way you can tackle your debt all at once and finally shake off creditors. No matter what debt relief option you choose, bankruptcy may be the fresh start you’re looking for.

If you’re looking into filing for a petition, it’s important you understand what life may look like during bankruptcy. You will be required to complete a financial inventory, participate in credit counseling, meet with your creditors to discuss terms and whatever else is needed to file for bankruptcy. Once that is handled you may face restrictions on obtaining credit, have your assets seized by creditors or be forced to hand over your tax refund every year.

Every bad financial action you make during the bankruptcy process could ripple and lead to serious consequences. If the court believes you’re acting suspicious or you fail to follow a step during the bankruptcy procedure, then the court may dismiss your petition. That is why it’s highly recommended you gain legal representation to guide you through the bankruptcy process. An experienced lawyer can guide you through your options and determine which will work best for you.

Debt Relief Attorney in Cincinnati, Ohio

When you’re not able to handle your financial situation any longer, bankruptcy can be a lifesaver. It can give you the new start you need and rid you of financial obligations so you can finally work on building your life. However, before you begin the process it’s important you have experienced legal counsel on your side. The bankruptcy process can be lengthy and very detail-oriented, so it’s important you have someone to count on with extensive knowledge in financial and bankruptcy law before moving forward. 

If you are looking into filing for bankruptcy, consult Steiden Law Offices. Eric Steiden has over 26 years of experience helping Kentucky and Ohio residents out of debt. He has a strict adherence to providing his clients with the most straightforward and transparent information regarding the bankruptcy process. With Steiden Law Offices, you will never be left in the dark and always have your questions answered promptly. To get in touch with Steiden Law Offices call and set up your first consultation free of charge. 

Eric Steiden and his team proudly represents individuals throughout Kenton County, Boone County, Campbell County, Gallatin County, Grant County, Pendleton County, Bracken County, Robertson County, Mason County,  in Kentucky, along with those who reside in Hamilton County, Butler County, Clermont County, Warren County, Clinton County, Montgomery County, Greene County, Preble County, Darke County, Highlands County, Miami County, Shelby County, Champaign County, Clark County, Brown County, Adams County, Lawrence County, and Scioto County, Ohio.

Overview of Life During Bankruptcy:

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What Happens to Your Assets When You File for Bankruptcy?

The first question a lot of bankruptcy attorneys get is “Will I lose my assets if I file for bankruptcy?” Well the answer will depend ultimately on what bankruptcy option you decide to pursue. Each type has different exemptions, which is where the court allows you to keep certain property by preventing it from becoming part of the bankruptcy estate. Some examples of exempt property include retirement plans such as 401(k)s or worker’s compensation.

A bankruptcy estate is a separate and legal entity managed by a trustee. Your assets you own at the time of filing will become part of the bankruptcy estate; the only exception to that would be exempt property. A trustee is then appointed to administer the non-exempt property of the bankruptcy estate. The role and duties of the trustee differ depending on the type of bankruptcy you’re filing and the unique circumstances surrounding the case. 

For a chapter 7 bankruptcy case, the trustee must liquidate non-exempt property and then distribute the proceeds to pay off creditors. Chapter 13 bankruptcy cases are handled a little differently. Instead the debtor must propose a debt management plan, and by doing so can keep certain property while they make payments from their current income. The trustee’s role in that case is to administer payments and monitor the debtor’s performance.

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Credit Restrictions After Bankruptcy

It may have been hard obtaining credit before, but during bankruptcy it can be even more challenging depending on your situation You can apply for credit as soon as your debt is discharged with Chapter 7 bankruptcy. If you filed for Chapter 13 bankruptcy, then you will need to receive prior approval form the court or Chapter 13 trustee. In addition, you must be current with your payment plan at the time of the request.

It’s rare for debtors to get approved for credit after a Chapter 13 bankruptcy unless the situation involves a special circumstance. Some possible scenarios in which the court may allow you to obtain new credit during bankruptcy include: 

  • Medical Expenses – Medical debt is not incurring, but it’s still a form of debt. If you visit a medical professional and receive a bill at a later time, the Bankruptcy code consider it to be a new credit.
  • Credit Cards – You could be able to obtain a new credit card after filing for Chapter 13 bankruptcy. This is so you can rebuild your credit with a secured credit card.
  • Car Payment – Many individuals purchase a new vehicle after a Chapter 13 bankruptcy. It can be tough to receive an approved loan from a traditional lender, but some do cater to individuals making Chapter 13 payments. However, it’s important to know that these lenders tend to have high interest rates.

If you’re in the process of filing for Chapter 7 bankruptcy, you will have to complete a 341 meeting with your creditors. This is not as intimidating as it sounds and you won’t be forced to sit in a room with the actual creditors themselves. Instead you will meet with your bankruptcy trustee before your court appearance for 5-10 minutes. From there, you will be sworn in by the trustee and be officially under oath. 

During the meeting, the trustee will review your bankruptcy petition and ask you to verify any information. They will likely ask about your debts, income, assets or anything else related to your finances. Some possible questions asked during a 341 meeting include: 

  • Are you the beneficiary of a future inheritance or life insurance payout?
  • How was the value of significant assets, such as your house or car, determined?
  • Have you made large payments to relatives or creditors?
  • Will you receive money from any business claims?
  • Do you anticipate federal or state tax refunds?

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What Happens If Your Income Increases When Filing for Bankruptcy?

How the court handles an increase in income during bankruptcy depends on the type of debt relief you’re pursuing. For Chapter 13 bankruptcy, the amount you are required to pay towards your debts is based on your income minus necessary expenses. So, any disposable income will eventually go toward your liabilities. That means if you get a raise at work or a new better paying job, you will likely have to disclose that information to the court.

The court may require you to make higher payments towards your debt if your income has experienced a significant change.  This is especially true if you obtained a new job with a drastic salary increase. However, the court doesn’t always require the debtor to make higher payments towards their debt. If the raise was minor, then the trustee may not seek any change in your repayment plan. 

Since chapter 7 bankruptcy rids most if not all your debts, it’s possible you won’t have to report your increased income. If the income increase wasn’t at the time of your filing, then it might not change the circumstances of your Chapter 7 bankruptcy. This means a trustee may not have any right to new income you earned after you file. However, if your income increased significantly, then you may be required to move to Chapter 13 bankruptcy. This depends heavily on where you are in bankruptcy proceedings, the provisions of your bankruptcy and the difference in your past and current income.

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Additional Resources

FTC | Credit Repair: How to Help Yourself – Visit the official website for the Federal Trade Commission and learn more about credit and ways to rebuild/reestablish it. Access the site to learn your rights as a borrower, reporting accurate negative information, what the Credit Repair Organizations Act is and where to find legitimate help.

United States Courts | Bankruptcy Basics – Visit the official website for the U.S. Courts to learn more about their federal laws for bankruptcy. Access the site to find the U.S Code statutes regarding bankruptcy, debt adjustment, and the SCRA/SIPA.

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Cincinnati Lawyer Explains Life During Bankruptcy in Ohio

If you are currently considering filing for bankruptcy in Ohio, having capable legal counsel at your side will help make the process much simpler. An attorney can handle all the requisite paperwork, protect you from creditor harassment, analyze your finances and make certain that you are on a path to achieving your financial goals. To find an attorney who exhibits these traits and more we suggest you call Steiden Law Offices.

Eric Steiden and his team have been assisting thousands of people battle their debt for over 26 years. He understands how stressful it can be to handle bankruptcy and will provide the best service possible to ease that worry. You can get in touch with him at and set up your first consultation free. Steiden Law Offices accepts clients throughout Southern Ohio, including the cities of Springdale, North College Hill, Madeira, Cheviot and Wyoming. Steiden Law Offices also represents individuals in the Northern Kentucky area including Boone County and Kenton County.

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