​A common situation that arises when people come into my office involves co-signors. Many people I talk to have either co-signed or had co-signers on loans. Typically these loans are for vehicles and clients wonder what will happen to co-signers if they file for bankruptcy.

This is a common questions with a pretty simple answer (most of the time). In general, the filing of a bankruptcy by one co-signor does NOT relieve the other co-signor of liability for the loan. So, for instance, if you have co-signed a loan for someone else and that person files for bankruptcy, you are still responsible for the entire amount of the loan. It often happens, of course, that the person filing for bankruptcy will choose to keep a car or other secured property. If they continue to pay on the property, then the filing of the bankruptcy will not affect the co-signor.

As with most bankruptcy situations, however, there is a caveat. When a bankruptcy is filed, there is a mechanism put in place called the automatic stay. It takes effect immediately upon the filing of the bankruptcy and protects the debtor from any sort of collection activities including phone calls or letters, lawsuits, wage garnishments or bank attachments. The automatic stay does not apply to any co-debtors or co-signors with the bankruptcy debtor. Or does it? There is a situation in which a co-debtor is also protected by the bankruptcy filing.

​The bankruptcy code provides for a "co-debtor stay" in a Chapter 13 bankruptcy (11 U.S.C. 1301). The co-debtor stay will stay in effect for the duration of the Chapter 13 plan.  However, a creditor can seek to get relief from the co-debtor stay unless the debt is a "consumer debt" and the debtor is re-paying the debt in full through their plan. If the creditor can show "irreparable harm" due to the co-debtor stay, the court may also grant them relief from the stay. If relief from stay is granted, the creditor can then pursue the co-debtor.

You should talk to an experience bankruptcy attorney for more answers on the scope and effect of co-signing. To speak with an experienced Ohio bankruptcy attorney, or for more information on Chapter 7 and Chapter 13, call me at 330-605-3508 or visit my website at http://www.ohiobankruptcyrelief.com/.

Many times people drive without insurance and the consequences can be severe. A common situation I see involves people who have gotten into an accident without having insurance. When there are damages, typically the other party's insurance company pays their insured customer and seeks reimbursement from the driver at fault. If the person is unable to pay, the uninsured driver can lose his license until the amount is satisfied. This is where bankruptcy comes in.

First off, coverage can be expensive, but it's required. If a person purchases automobile insurance, the State of Ohio requires the person to purchase Bodily Injury Liability Coverage as well as Property Damage Liability. In Ohio the required minimum for Bodily Injury Liability Coverage is $25,000 per person injured in any one accident and $50,000 for all persons injured in any one accident. The required minimum for Property Damage Liability Coverage is $25,000 for injury to or destruction of property of others in any one accident.

​So what is the penalty for driving without the proper amount of insurance? Failure to provide proof of financial responsibility, when required, will result in the following civil penalties imposed by the Registrar of Motor Vehicles:

■Lose driving privileges for a minimum of ninety (90) days and up to two (2) years;

■License plates and vehicle registration suspension;

■License plate reinstatement fees for first violation, second violation, and third or subsequent violation (There is an additional non-voluntary surrender fee for failing to surrender the license, plates or vehicle registration to the BMV);

■Require filing with the BMV (SR-22 or bond) to continuously maintain proof of financial responsibility for a minimum of three (3), up to five (5) years from the date of the suspension of operating privileges;

■Vehicle immobilization and confiscation of plates for 30 to 60 days for violating FR suspension. Third and subsequent offenses could result in vehicle forfeiture and a five (5) year suspension of vehicle registrations.

​Driving and registration privileges cannot be restored until all requirements of the suspension have been met. If you think this is bad, consider what can happen if you get in an accident. If you are involved in an auto accident without insurance or other proof of financial responsibility, additional penalties may apply. You may have a security suspension for two years or more and a judgment suspension for an indefinite period until the judgment is settled. These suspensions can involves several thousand dollars and people can often lose their license for years. This is where bankruptcy can come in.

​Assuming there are no other holds on your license, filing for bankruptcy will allow you to get your license back immediately. As long as there were no drugs or alcohol involved, the amounts owed to the insurance company can be discharged through bankruptcy. In fact, the Ohio Revised Code even provides that your reinstatement fee can be discharged in bankruptcy (ORC 4510.10(G)). As soon as your case is filed, you can take your paperwork to the Bureau of Motor Vehicles to get your license reinstated. An experienced bankruptcy attorney will provide you with the appropriate paperwork and guide you through the process.

I'm an experienced Ohio bankruptcy attorney who has managed or filed over 2,000 cases throughout Northern Ohio. For more information on Chapter 7 and Chapter 13, call me at 330-605-3508 or visit my website at http://www.ohiobankruptcyrelief.com/.

​Sometimes, a Chapter 13 bankruptcy can do wonderful things. You may be able to get rid of a second mortgage or judgment liens, pay back your creditors at a fraction of what you owe, or actually pay less than you owe on a vehicle. In bankruptcy lingo, the last situation is what is called a "cramdown". A cramdown allows you to pay the value of your vehicle through your Chapter 13 plan, as opposed to what you owe. Sounds good so far. But, of course, there are conditions that must be met.

​The most important requirement is what is called the "910 day rule" which, in essence, states that you cannot cram down a purchase money security interest in a vehicle purchased within 910 days (roughly 2 1/2 years) before the filing of your case. So if you took out a loan and purchased a car with it last year, you cannot cram it down. However, even if you cannot do a cram down, you can still often lower the interest rate on your auto loan if you pay it through the Chapter 13 plan. Currently, you can lower interest rates to about 10% on vehicles paid through your repayment plan. (This changes periodically, so check with an attorney). This alone can save you thousands of dollars over the course of your loan.
So what about about a vehicle purchased more than 910 days ago? Well, then you're in business. If you purchased your vehicle more than 910 days ago, you can pay the value of the vehicle through your Chapter 13 plan as opposed to what you owe. So, for example, if you have a vehicle that you owe $15,000 on, but that is only worth $10,000, you can pay the $10,000 (with interest, of course) through the plan and emerge with the vehicle free and clear.
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​Although cramming down a loan on a vehicle is a powerful tool, one of the biggest obstacles relates to the value of the vehicle. The amount owed and the date of purchase are factual matters that are easily determined. So how do you determine just how much your car is worth? Unfortunately, this is where the bad news comes in. The value of the vehicle is determined by its replacement cost (what it would cost you to buy a new one from a dealer). This is obviously the highest value. And sometimes this prevents a cramdown on a vehicle that might otherwise qualify. However, even under these circumstances, it can still be beneficial to cram down the loan through the plan.

But there is also another caveat that can help you pay less even if you took out the loan within 910 days of the filing of your bankruptcy. The Bankruptcy Code only prevents you from cramming down a purchase money security interest. A purchase money security interest is simply a security interest in collateral that was purchased with the loan. So when you take out a car loan and use the money to buy the vehicle, the lender has a purchase money security interest in the car. The reason this is important to know is because if you took out the loan for any other purpose than to buy the vehicle (e.g. refinance), the 910 day rule does not apply. It's important to disclose this to your Chapter 13 attorney if this is your case.

To speak with an experienced Ohio bankruptcy attorney, or for more information on Chapter 7 and Chapter 13, call me at 330-605-3508. We offer a FREE CONSULTATION where you can see if bankruptcy is right for you.

Having your car repossessed is a distressing event that can send shockwaves through your financial stability and daily routine. Whether due to unforeseen financial setbacks, missed payments, or other circumstances, having your vehicle repossessed can be overwhelming. Here we'll walk you through what to expect if your car is repossessed, shedding light on the process, the potential consequences, and offering guidance on how to navigate this challenging situation with resilience and clarity.

​
How quickly the creditor can repossess your car depends on your contract. As soon as the payment is technically in default, the creditor can repossess it. Your contract may give you a grace period, but note that some creditors are quicker than others to show up and take your car.

The type of lender you have will also determine how quickly the vehicle is repossessed. National lenders and bigger banks are more likely to repossess a vehicle when it becomes more than 60 days past due. 

Subprime lenders, including the financing arms of buy-here/pay-here car lots are much more likely to repossess your vehicle more quickly. If your vehicle was repossessed and you want to get it back, your best option is to contact the lender as soon as possible before more late fees and interest accrue.

​In Ohio, creditors with a lien on your vehicle don’t need a court order to repossess your car. The lien allows them to take possession of the vehicle as soon as it is in default. Whereas post-judgment collection efforts (think bank attachment or wage garnishment) allow you the opportunity to request a hearing, the vehicle repossession is immediate. Because of this, car repossessions can often be a surprise and leave owners without transportation or in need of retrieving items in the vehicle. If your car is behind, keep in mind that you risk repossession without any notice.

 The consequences of having a vehicle repossessed or voluntarily returning it are the same. The only situation where it would be different is if you have a written agreement that the creditor will not pursue the balance on the loan if the vehicle is voluntarily returned. These are very rare and, in almost every case, you’ll still be responsible for the loan balance.

​The creditor is required to notify you in writing that you can still get your car back. Usually this is conditioned upon the repayment of all past due amounts, plus the cost to repossess the vehicle.  If you fail to pay this amount to get the car back, the creditor must also notify you of the date and time of the sale of the vehicle.

​If your car is repossessed and sold by the creditor, they will pay for the cost of the auction and apply the rest of the proceeds to your loan balance. If the funds are not enough to cover the balance on the loan, you are still responsible for the balance. The creditor can sue you and pursue the amount still owed, whether through wage garnishment, bank attachment or liens on any real property that you own.

​If you can’t afford what’s still owed on the vehicle, bankruptcy is one possible option. At Lake Legal Services, we’ve handled thousands of bankruptcies. Call now at 330-605-3508 or fill out our contact form to see if bankruptcy is right for you.

Have a second mortgage on a house that is severely "underwater"? Then read on. You may find that there is an option you'd never thought about that can help you get rid of that second mortgage, sometimes without paying a penny on it.
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First off, we have to talk about what a "secured debt" is. Secured debts are obligations that are secured by a particular piece of property, such as a house or a car. If you don't pay, they can take that property, whether through foreclosure or repossession. Having said that, we should all be able to see that mortgages on houses are secured debts, right? Of course, the answer is . . . maybe. What about a situation in which someone owes more on a house than it's worth? Is the mortgage fully secured, or is it secured just to the extent of the value of the property? And what about a second mortgage where the house is worth less than the FIRST mortgage. For example, what if a house is worth $80,000 with a first mortgage of $90,000 and a second mortgage of $20,000? Is the second mortgage really secured? If the second mortgage holder forecloses, how much money do you think they'd get? (Hint: the answer is A BIG FAT ZERO).

​One of the problems is the initial appraisal used to get the second mortgage. Appraisals commissioned by mortgage lenders are notoriously untrustworthy. In most instances, they over-inflate the true value of the home, sometimes by ridiculous amounts. The reason for this? Because the mortgage lender has to make the loan "work". The loan cannot be underwritten if it doesn't have any equity and the loan-to-value ratio is too small. So how to fix this? Get an appraisal that shows that the house is worth more. When that happens, the the lender can give the second mortgage, brokers can get their commissions and the borrower can walk away with some cash in their pocket. So everyone wins, right? WRONG! Because it's all an illusion. There is no way the house can actually sell for the appraised value. If the borrower continues to pay on the second mortgage, then there is no harm. When they can't afford to, then the real problems start.

So how can you get rid of a second mortgage without paying for it? The answer is simple: Chapter 13 bankruptcy. If there is no equity attached to the second mortgage (the borrower owes more on the FIRST mortgage than the house is actually worth), then you can get rid of, or "strip", the second mortgage. In our example above, the borrower would be able to strip the second mortgage. And the amount of the second mortgage is immaterial. The only numbers that matter are the value of the property and how much is owed on the FIRST mortgage. Most courts are very particular in how you have to go about doing this and what appraisals are acceptable, so you should consult an experienced Chapter 13 attorney to do this for you. So what happens to the second mortgage? It is treated as unsecured and paid at whatever percentage the rest of your unsecured creditors are paid at. It is important to know, however, that stripping the second mortgage is contingent upon completing your Chapter 13 case and receiving your discharge. If your case is dismissed or converted to a Chapter 7 bankruptcy, the second mortgage stays secured. Also, if there is even ONE PENNY of equity in the second mortgage, the whole darn thing stays secured.

You should talk to an experience bankruptcy attorney for more answers on the scope and effect of co-signing. To speak with an experienced Ohio bankruptcy attorney, or for more information on Chapter 7 and Chapter 13, call me at 330-605-3508 or visit my website at http://www.ohiobankruptcyrelief.com/.

If you're sued in Ohio, you need to act. Sitting back and burying your head in the sand is the WORST thing you can do. So how does your standard lawsuit proceed and what time frames are you looking at? And how does bankruptcy fit in the equation? Here's a primer on how they work and what can happen.


When you're sued, whether in municipal court or common pleas court, you have to be "served" with the lawsuit. Most people have the idea that process servers hunt people down and find unusual and amusing ways to hand them lawsuits and "serve" them. We can thank movies and television for this perception. The fact is that personal service is unusual in Ohio, except in the case of foreclosures. Most service is done by certified mail. Ohio rules dictate that you have to first be served by certified mail or any other private service that requires a signature for delivery, such as FedEx or UPS. If this type of service is unsuccessful, it is usually tried a second time. If it is unsuccessful again, service is usually by ordinary mail. If the mail is returned or service is otherwise unsuccessful, then you can be served by "publication". Basically, notice of the lawsuit is put in a newspaper and you are considered "served" after a certain amount of time. I won't go into the details, but the point to take away is that you can only delay being served with a lawsuit, but you cannot completely avoid it.


OK, so you've been served. You then have 28 days (not including the date of service) to "answer" the lawsuit. Answering it means filing an answer with the court and serving a copy of your answer on the plaintiff or their attorney, if they have one. If you've answered it, this will delay the lawsuit and the court will put it on a case management track that includes deadlines and hearing dates. If you don't answer it, the plaintiff will likely get a default judgment against you for not answering it. Either way, if it is a legitimate claim, you will likely have a judgment against you eventually.


So what are the consequences of having a judgment against you? This is where we need to pay close attention. If a creditor has a judgment against you, they can then start garnishing your wages, attaching bank accounts and putting liens on your property. The one thing that can stop a creditor dead in their tracks is filing for bankruptcy.


So how does bankruptcy fit in? A Chapter 7 or Chapter 13 bankruptcy will STOP any lawsuits, whatever stage they're at. Whether you've just been served or you're already having your wages garnished, a bankruptcy will stop it. But, as always, there is a caveat. If a creditor has a lien against your home, you may or may not be able to get rid of it through a bankruptcy. If the lien is completely unsecured (you owe more on superior liens than the house is worth), then you can get rid of it in a Chapter 7 or Chapter 13 bankruptcy. If, however, the lien is even partially secured, then the debt may be wiped away, but the lien may continue to stay on the property. If this is the case, then it will have to be dealt with whenever the house is sold or refinanced. An experienced bankruptcy attorney should be able to help you through the process of getting rid of liens in bankruptcy.


For more information on Chapter 7 and Chapter 13, give us a call today at 330-605-3508, or contact us through our website. We have a free consultation where we can determine if bankruptcy is a good option for you.

​Oftentimes, clients come into my office confused about their debt relief options. They have a general idea about what bankruptcy is and how it works, yet they are bombarded daily with advertisements about settling their debts without bankruptcy. What they never hear is that settling with credit card companies or debt collectors may mean higher taxes in the long run.

Some people come into my office already enrolled in a "debt settlement" plan. Others have attempted to settle debts directly with creditors. When people settle debts with banks, collection agencies or other lenders for less than the balance due, the creditor is required to file a Form 1099-C with the IRS. The Form reports the cancellation of debt and the amount forgiven (the difference between what you owe and what you settle for) as income to the debtor.

For instance, if you owe $5,000 on a credit card, but you pay $3,000 to settle it with the creditor, that $2,000 of forgiven debt must be reported as income on your tax return. The result will mean either you will owe more taxes or a get a smaller refund. Not surprisingly, debt settlement companies and creditors do not tell their customers about these implications. 

And while some debtors may feel better about settling the debts without filing for bankruptcy, they need to understand that there are real tax implications for doing so. So how is bankruptcy different? Debt that is discharged in a bankruptcy is not subject to taxation as forgiven debt. This is because technically the debt is not forgiven, your creditors are just prohibited from collecting on it.

In the end, many people may find that they've traded in a bad creditor for the worst creditor of them all, the IRS.  It's important to speak with an experienced bankruptcy attorney about whether or not filing bankruptcy is your best option.

Filing bankruptcy can be complicated and confusing. For more information on Chapter 7 and Chapter 13, or for a free consultation, call me at 330-605-3508 or visit my website at http://www.ohiobankruptcyrelief.com/.