Doing Nothing Is Not a Good Option
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.
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Debt Relief Programs Can Have Unforeseen Consequences
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/. |
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The Law Office of Lake Legal Services
Bankruptcy Attorney in Northeast Ohio
330-605-3508
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