In this white paper, Attorney Daniel Gigiano reviews Ohio bankruptcy and foreclosure laws, which have changed considerably over the last decade. Attorney Gigiano has practiced bankruptcy and foreclosure law since 1993 and shares his legal knowledge of these difficult financial situations that have affected so many in Ohio.
In Ohio, you can now keep even more of your assets when you file for bankruptcy. Starting April 1, 2013, each person can keep up to $132,900 of equity in their home, which adds up to $265,800 for a married couple filing a joint bankruptcy. This is over five times more than people were allowed to keep previously. This exemption was increased again in 2016 to $136,925 per person.
However, this law had many opponents who argued it only applied to debt that incurred after March of 2013, which meant the old protection of $21,625 per person would apply. First, a judge in Toledo stated that we should use the exemption of $132,900. Later, the judge of the Canton bankruptcy court also ruled that this exemption should apply without any limitations. Currently, it appears that this law is here to stay. Even if the opponents had won the day at the time, eventually their argument would have become moot, as very few bankruptcies would consist of debt entirely incurred prior to 2013.
People considering bankruptcy are usually concerned with whether they can still keep their houses, cars, furniture, clothing and the tools they use to make a living. The good news is that Ohio has generous exemptions protecting those and other assets. Exemptions work by creating a value that one gets to keep before a creditor or bankruptcy trustee could take anything. This is why a bank account garnishment does not include the first $475 in the account; that is the cash on hand exemption that the owner of the account gets to keep. Anything in the account above that amount and not subject to any other exemption can be garnished and sent to the court for disbursement to the creditor.
Bankruptcy works the same way, except there is no garnishment. The bankruptcy trustee determines if there are non-exempt assets and asks the bankruptcy filer to turn over those assets. If the bankruptcy filer refuses, the trustee files a motion with the court for turnover of the assets. The bankruptcy judge makes a decision as whether the trustee could take the items from the bankruptcy filer.
The most common Ohio bankruptcy exemptions for 2016 are as follows:
Bankruptcy is specifically mentioned in the United States Constitution. The United States Constitution states: “[The Congress shall have Power] to establish . . . uniform laws on the subject of Bankruptcies throughout the United States.” This means bankruptcy is constitutional.
The Framers wanted to ensure that there would be a uniform system of bankruptcy so that one state would not put someone in debtor’s prison for a debt that was discharged in another state. James Madison, in Federalist Paper No. 42, wrote about how important uniform bankruptcy laws would be for the regulation of commerce in the United States. In this article, the power to pass and regulate bankruptcy was mentioned in the same paragraph as the power to issue currency and regulate the use of foreign currency.
The United States Congress passed the first bankruptcy law in 1800. However, that law only lasted until 1803. The next bankruptcy law was not passed until 1841, which also had a short life, lasting only until 1843. After the civil war, Congress passed a bankruptcy act with a little more longevity, lasting from 1867 to 1878. Congress finally passed a permanent bankruptcy law in 1898, which remained in place for eighty years. In 1978, the current structure of bankruptcy laws were enacted. In 1984, 1986, 1994, and 2005, the bankruptcy act was revised, but the basic structure remained intact. The 2005 act added the means test and limits on restructuring vehicle loans.
The Fair Debt Collection Practices Act (FDCPA) prevents debt collectors from harassing you and calling you outside normal business hours. While the law gives you some rights, it does not give you the right to avoid your debt. The FDCPA covers only personal and household debts but not business debts. Typical personal debts are vehicle loans and credit card debts.
Debt collectors, otherwise known as bill collectors or collection agencies, cannot harass or abuse you, nor can they engage in deceptive or unfair practices in their attempt to collect the debt. If a bill collector calls you before 8 a.m. or after 9 p.m., you can write a letter telling the bill collector to stop. It is a good idea to send the letter by certified mail and to keep a copy of the letter. Once the debt collector receives your letter, the debt collector must stop calling you outside the hours of 8 a.m. and 9 p.m. but can continue to call you between those hours.
A debt collector can call you at work. If your employer does not allow such calls, you can tell the debt collector you are not allowed to receive debt collection calls at work. While you can do so by phone, it is a good idea to follow up by certified letter. Upon receiving this instruction, the debt collector must stop calling you at work.
Can a debt collector lie? No. They cannot pretend to be someone else. They cannot threaten to put you in jail. Such tactics are violations of the FDCPA. Fighting against a violation of the FDCPA starts with your actions. You can contact the Federal Trade Commission or the Ohio Attorney General’s Office. You may also hire an attorney to handle the debt collector harassment case. If you win, you have the right to make the debt collector pay your attorney fees.
Here is some useful contact information for organizations that can help you when you are victim of a violation of the FDCPA:
Some payday lenders threaten to call the police if the check bounces, prompting one to ask, “Can I go to jail for defaulting on a payday loan?”
A payday loan is usually a small loan with a postdated check as collateral for the loan. The due date is usually the date of the person’s next paycheck. Payday loans carry a high interest rate, often more than 300%. If one borrows $900 on March 1 and has to pay $990 back on March 15, it may not seem like much. However, ten percent over two weeks is equivalent to 260% over a year. If someone repeatedly took out this same loan for a full year, that person would pay 260% interest on $900, which amounts to paying the $900 back, plus $2,340 in interest.
What happens when the lender tries to cash the postdated check? Because the check was postdated, the lender would not expect you to have funds to cover the check on the date you gave them the check. Having insufficient funds on the due date does not amount to a criminal offense unless you gave the lender a check knowing you would have no funds to cover it on the due date. Because you would be receiving your paycheck at that time, you would certainly expect to have sufficient funds to cover the check on the due date. Accordingly, any threat by the lender to call the police to have you arrested for passing a bad check is likely to be an empty threat.
Can bankruptcy discharge debt from a payday loan? Of course it can. Bankruptcy cannot eliminate one’s criminal liability if the funds were stolen or procured by fraud. In such instances, one may not even receive a discharge for such debts. However, payday loans, as discussed above, rarely involve any potential criminal liability, which means that the loan can usually be easily discharged in bankruptcy. Once a driver is stopped at a sobriety checkpoint, the officer determines if the driver is suspected of operating a motor vehicle under the influence of alcohol or drugs. If there is no suspicion of OVI or other legal wrongdoing, the driver is permitted to leave. If there is suspicion of DUI, the officer detains the driver and administers field sobriety tests and a breath test. If the testing establishes probable cause to believe the driver is impaired, the driver may be arrested.
Some payday lenders threaten to call the police if the check bounces, prompting one to ask, “Can I go to jail for defaulting on a payday loan?”
What is the Ohio foreclosure process? Before a foreclosure case is filed, the mortgage company sends a foreclosure referral package to their attorney. A title examination is done to identify all individuals and entities that have an interest in the real estate, which can even include spouse’s dower rights. Once that is done, a complaint is filed, with instructions to serve the individuals and entities with an interest in the real estate.
Service usually occurs by certified mail or a sheriff’s deputy. Once the homeowner receives the complaint, he or she has twenty-eight days to formally respond to the complaint. Once the complaint is received, it is important to consult with an attorney to determine if there are any legal defenses that need to raised, as well as any motions that need to be filed prior to answering the complaint. Some claims must be raised before filing a formal answer.
A foreclosure can take four to six months to the sale and confirmation. Failure to defend the foreclosure complaint results in the lender’s attorney filing a motion to default judgment, speeding up the process. Defending the foreclosure usually result in the court referring the case to a number of status or mediation hearings, where forbearance and modification agreement options are considered. Such programs include the “Home Affordable Modification Program” (HAMP).
A foreclosure judgment gives the lender the ability to sell the real estate and to collect on the money judgment against the homeowner. Once a sale is approved, the sheriff appraises the real estate, schedules a sale, and advertises the sale. The sheriff’s sale is a public auction where any adult can submit a bid. The property must sell for at least two-thirds of the appraised value. The sheriff reports the results of the sale to the court. The lender then requests the court to confirm the sale, distribute the proceeds and order a sheriff’s deed. If the homeowner has not yet moved out, the buyer can start the eviction process. Most of the time, the lender buys the real estate. Any mortgage balance not covered by the sale is known as a deficiency balance.
Do you get what you pay for when you hire a cheap bankruptcy attorney? Typically, yes. Daniel Gigiano Co., L.P.A. has a competitive fee, but we are not the lowest fee. We do not want to be the lowest fee because of the loss of professionalism and service that would likely occur if we were to charge such a low fee.
Daniel Gigiano Co., L.P.A. receives many phone calls asking for the cost of a chapter seven bankruptcy. Some of these prospective clients are looking for a cheap bankruptcy attorney. Some are just trying to get an idea of the range of bankruptcy attorney fees. We happily give them our fee and tell them what we do for that fee. However, it is really difficult to show them all that we do for that fee.
The list below provides an overview of the professional bankruptcy services provided by Attorney Daniel Gigiano:
1. Initial consult with client in-person
2. Search local court records and auditor’s records (fiscal office records in Summit county)
3. Order client credit report
A credit report is ordered, saving the client substantial amounts of work in searching for long-lost creditors. A records search is ordered, thoroughly checking the electronic records of vehicle and real estate ownership. Some trustees conduct this search. Shouldn’t you have access to the same information?
4. Order credit counseling class and financial management classes for client
Many attorneys will send their clients to find their own class. After years of being harassed by phone calls and trying to sort out truth from lies in these calls, do you really want to do more of the same? Once you file your bankruptcy petition, numerous financial management providers will send you material asking you to take their course, leaving you to guess which ones are legitimate. Do you really want to do this work? Ordering the courses streamlines this process and saves you this hassle.
5. Review completed questionnaire and documents with client in person
The in-person review eliminates phone tag and delays. Because the clients and the attorney are reviewing the documents together, the clients do not have to guess what the attorney is talking about and can ask questions in real-time. They are looking at the documents and are actively engaged in the process. This is not simply a “sign here” meeting.
This process leads to a better bankruptcy petition, with thorough and accurate information. An experienced and thorough bankruptcy attorney, Daniel Gigiano actually reviews the petition with the clients, going through the details. This sometimes results in corrections, but better in the office than to be caught flat-footed sitting on your heels at the hearing. This process leads to a smoother bankruptcy hearing.
6. Review information with client in person before hearing
At the hearing in Akron or Canton, Attorney Daniel Gigiano reviews the information one last time with the client right before the hearing. After the hearing, clients often ask if “that was it?” The clients are often amazed at how easy the questions were. The questions are not easy, but they can be if you have been thoroughly prepped for the hearing.
Some may say such thorough bankruptcy services are unnecessary, or they would rather have their bankruptcy attorney miss certain unwanted pieces of information. Attorney Daniel Gigiano has attended many hearings in Canton, where the hearings are public.
While waiting for his client’s hearing, Attorney Daniel Gigiano takes a few minutes to listen to other hearings. A good attorney never stops learning. Those hearings are usually just conducted by the local chapter 7 trustee. If the petition is red-flagged, a representative from the U.S. trustee comes to ask questions.
In one hearing, this bankruptcy attorney heard the U.S. trustee, who made a special trip to question this debtor, ask about “house expenses” listed on her bankruptcy petition. Attorney Daniel Gigiano was surprised to hear this, too, as there is no line item for “house expenses,” nor is that a clear depiction of expenses. Then, the U.S. trustee did take the trouble to send an additional representative to thoroughly vet this person with questions. The “house expenses” item turned out to be a variety of expenses, many of which were already listed elsewhere in the petition.
Now, this attorney asked himself, didn’t the bankruptcy attorney read this bankruptcy petition before filing it? This bankruptcy attorney was certain that this debtor did not leave that hearing asking if “that was it?” This particular debtor may have also faced a motion to dismiss her bankruptcy due to the misleading and untruthful nature of her petition.
Perhaps that person had one of those cheap bankruptcy attorneys and was run through a “mill” where they had minimal interaction with an actual bankruptcy lawyer. Such a process can miss things, but the U.S. trustee reads those bankruptcy petitions and looks for missing things.
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Bankruptcy and Foreclosure Cases Successfully Represented by Daniel Gigiano
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Attorney Gigiano also has attended numerous bankruptcy seminars, including the annual seminar in Hartville, Ohio. Serious bankruptcy attorneys attend this seminar regularly, as it provides updates on bankruptcy law changes as well as direct information from bankruptcy judges, trustees and creditor’s attorneys – the people who decide the average person’s fate. These people present and answer questions at this seminar. Sometimes, you cannot get this information from a book or online resources. You have to be there to hear it in person, especially when one of the judges offers their take on a topic.
The U.S. Trustee’s office also regularly presents at the Hartville seminar. Sometimes, they lecture on the federal criminal sanctions for lying on your bankruptcy petition. Real people go to real federal penitentiaries for real misstatements on real bankruptcy petitions. Unfortunately, many of these misstatements provide little benefit in the bankruptcy petition. How much better it is to have the truth presented in the most favorable light on solid legal grounds, leading to a “that was it?” hearing. Are cheap and easy bankruptcy petitions worth the possibility of dismissal of the bankruptcy petition or possible federal criminal charges? Is a cheap bankruptcy worth a denial of discharge?
Contact Daniel Gigiano at 330-336-3330 or gigianolaw.com/bankruptcy if you need additional information about Ohio bankruptcy and foreclosure laws, are considering filing for bankruptcy or are in a potential foreclosure situation. The initial 30 minute consultation is always free.
