Dayton Bankruptcy Law Blog

When a home in Dayton, Ohio, faces the possibility of foreclosure, it can be hard for the owner to make a decision. Some will engage in a short sale, believing the move is much better for the owner's credit than a foreclosure. A short sale of a home, along with benefits of the Mortgage Debt Forgiveness Act, can allow for some to experience major debt relief.

The Mortgage Debt Forgiveness Act, enacted in 2007, allows homeowners to receive debt forgiveness on a mortgage without paying taxes on it. Before the act was passed, any debt that was forgiven was considered income, which means that it was taxable.

With insurmountable debts, some living in Dayton, Ohio, have turned to bankruptcy. Though many would expect this to occur to people with a limited amount of wealth, it regularly occurs to those once considered rich, and it is more often visible to the public. That is what is currently happening to former National Football League player Warren Sapp.

Recently, the 39-year-old former star filed for Chapter 7 bankruptcy. His filing indicates that he owes a large sum of money for unpaid child support and alimony. Adding in what he owes to his creditors, he owes more than $6.7 million, while he only has assets of approximately $6.45 million. Reports indicate that the man has, among other assets, a $1,200 lion skin rug, a $2,250 watch and 240 pairs of Jordan athletic shoes valued at $6,500.

In recent years, many have filed for bankruptcy in Dayton, Ohio. While Chapter 7 bankruptcy may often be the quickest route to clearing debt, it is not always available for individuals. As ruled on by the U.S. Supreme Court, an attorney cannot be paid from the estate of a Chapter 7 bankruptcy. This means that attorney fees must be paid up front. This left many individuals without the option of filing for Chapter 7 due to the fact that they had minimal funds to pay for an attorney.

Though it may take longer, a Chapter 13 bankruptcy can still allow an individual to shed his or her debts. In this form of bankruptcy, a trustee oversees the payments made during bankruptcy. It is often the case that a monthly payment is established and made for three to five years.

Potential bankruptcy filers are often concerned about losing their assets when they file personal bankruptcy.  The bankruptcy trustee's responsibility is to seize and sell all non-exempt assets in a Chapter 7 bankruptcy or to make sure that the debtor (the filer) repays all non-exempt equity in a Chapter 13 bankruptcy.  In Ohio, the extent to which we can exempt assets is a function of state law.  Many states use the federal exemptions instead. 

So, what about Workers' Compensation benefits?  What if it's a lump sum?  What if the money is already in a checking account?  What if it has been "set aside" in the event that future Medicare claims are the result of that work-related injury?  See below.