Cleveland ranked fifth on SmartMoney's list of twenty-five major cities. As the credit freeze begins to thaw, interest rates fall and people are once again able to refinance, there may be light at the end of the tunnel. Despite this positive news, however, Cleveland and Ohio are still experiencing a significant rise in the number of bankruptcies filed, which include many homeowners for whom this rebound comes too late and who were forced to abandon their homes (see prior entry Ohio is Not Alone: Bankruptcies Continue to Rise Across the Nation). If you are facing foreclosure or considering bankruptcy, be sure to contact an experienced attorney to learn your options.

1. Ensuring that all creditors are listed and that the creditor names, addresses, type of debt, balances due and account numbers are accurate. This is important so that all creditors are given proper notice and all debts are accurately listed so they are covered by your bankruptcy filing.

2. A credit report may help us find creditors that you have overlooked or forgotten about. In order for a debt to be discharged, it must be properly listed, so it is important that we are aware of all of your debts.

3. Credit reports can alert our firm to judgments or pending lawsuits against you that need to be addressed and that you may not be aware of.

4. Credit reports can also alert us to liens against your property for which we may need to seek lien avoidance in order to protect your property.

5. The credit report could alert us to co-signers on some of your debts, which are important to list in your bankruptcy.

6. If you are married, then we might find items on your credit report that you are unaware of and the report will also help us determine if you should file individually or jointly with your spouse.

7. We may find out about debts that were incurred by a prior spouse, possibly without your knowledge.

8. The credit report may alert us to mistakes on your report and you can then take action to correct the mistakes.

9. The credit report often provides information on the collection agencies representing creditors for debt collection. This allows us to notify the collection agencies of the bankruptcy so that collection efforts stop.

10. If the Internal Revenue Service has a tax lien on your property, the credit report will alert us so that it can be dealt with properly.

11. Knowing what is on your credit report can help you take steps to improve your credit and get back on track to a better credit rating for important purchases after your debts are discharged.

Our law firm can provide Clients with a three bureau credit report that includes all information for the last ten years and is specifically prepared for use in preparation for bankruptcy filing. Our firm will provide you with a copy of the report for your review. To learn more about how a credit report can help you in bankruptcy, contact an attorney now.

You should also be aware that the bankruptcy court does not have any influence on your credit report and does not report any information directly to the credit bureaus.

After filing bankruptcy and receiving a discharge it is a good idea to obtain a credit report to make sure that the bankruptcy has been properly reported and that your debts are showing the proper status and/or have been removed. If your credit report has errors or discharged debts have not been removed, your bankruptcy attorney should be able to help you get your report corrected or guide you in what steps to take.

Under a recent federal law you are entitled to one free credit report per year from each of the three consumer credit reporting agencies. Each of the bureaus may have different information so you should check all three and correct any inaccuracies.

To get your free credit report you can write or call:

Annual Credit Report Request Service
PO Box 105281
Atlanta, GA 30348-5281
1(877) 322-8228

You can also contact any of the credit bureaus directly by clicking on the links below or calling the number listed:

Visit Equifax or call 1(800) 685-1111
Visit Experian or call 1(888) 397-3742
Visit TransUnion or call 1(800) 916-8800

Contact a bankruptcy attorney to learn more about how a bankruptcy may help you and how it will affect your credit.

The reason I am sharing this story is to show you that, if you are falling behind on your mortgage, you are not alone. Remember, they were calling thousands of people just like you that, for whatever reason (and there are many), could not pay their mortgage. You may have been a victim of a predatory loan or a layoff. It doesn’t matter the reason, what is important now is that you don’t stick your head in the sand and ignore the problem because it won't just go away. You should talk to the bank or contact an attorney to speak on your behalf. The worst thing you can do is to ignore the problem and let your opportunity to fix the situation slip away.

Once you have fallen behind on your mortgage (usually by three months or more) your lender will consider you in default, accelerate your debt and commence foreclosure proceedings. Ordinarily, once the bank has determined they will foreclose they will stop accepting payments and will not reinstate your loan unless you come up with the entire past due amount plus any legal fees and costs they have incurred.

Even after a foreclosure is filed you have options. Many counties, such as Cuyahoga, have voluntary mediation programs in which you can elect to participate when facing foreclosure (you should receive a notice of the program with your foreclosure papers from the clerk of courts). A qualified attorney may also be able to help you negotiate a loan work out to reduce your interest or payments, but this is more easily done before you incur legal fees and expenses of foreclosure. Depending on your overall financial situation you may want to contact an attorney to explore a Chapter 13 bankruptcy which allows you to keep your house and catch-up on your past due payments while also lowering and eliminating your other debt through a structured repayment plan. If you are facing foreclosure, contact an attorney now to learn more about your options.

The exemption for the debtor’s property used as their primary residence increases from $5,000 (current law) to $20,200 (under SB 281).

The exemption for one automobile increases from $1,000 (current law) to $3,225 (under SB 281).

Ohio Senate Bill 281 also includes other increases to exemptions for recoveries for personal injuries, household items and more. If you are considering bankruptcy, you should contact an attorney to learn more about Senate Bill 281 and how it could help you keep more of your assets in bankruptcy.

There are many reasons for this. For one, many homeowners are finding that they can no longer tap into the equity in their homes or, worse yet, their home is worth less than they owe on their mortgage. The job market in Ohio is also bleak and many companies are reducing employee hours and overtime to cut costs in the poor economy. Gas and food prices have also been rising steadily. Now the recent stock market collapse has made matters worse and threatens the retirement and financial security of many Ohio families.

If, like many in Ohio, you are struggling in these hard times, then bankruptcy may help you get back on track. Click here to learn how bankruptcy might help you.

The legal fee charged will depend on the nature and complexity of your case and you can usually get a quote by phone in your initial consultation with an attorney. There will also be a filing fee which is set by the Bankruptcy Court. In the Northern District of Ohio, the Chapter 7 filing fee is currently $299.00 (see Northern District of Ohio Bankruptcy Fee Chart for other fees).

In some cases you may be able to borrow funds through a small loan from a family member. However, if you do this you must be completely honest about the reason you are borrowing the money since they will become your creditor and the loan must be disclosed in your bankruptcy.

I do not suggest or advise that you incur additional debt from credit cards or an institutional lender for the purpose of filing bankruptcy and for this reason our firm cannot accept credit cards for bankruptcy payments.

If you expect to receive a tax refund, you could use the funds to pay for your bankruptcy and begin your new financial start rather then spending the money to catch-up on bills only to fall behind again and repeat the cycle.

A last resort may be to withdraw funds from or borrow against your retirement account such as an IRA or 401(k). Save this is a last resort because you may face steep penalties for withdrawal. However, you can usually exempt retirement funds from creditors in bankruptcy and, therefore, you may be better off to use a small portion of your retirement funds to pay for bankruptcy and discharge your debts rather then depleting your retirement funds in an attempt to pay for bankruptcy. See Ohio Exemptions: Bankruptcy May Save Your Retirement Fund for more on this topic.

As you can see, there are several options that may work to bring debt relief within your reach. Talk to an attorney to find out which option will work for you.

If you are not yet in foreclosure but are behind on your mortgage, then you should also consult an attorney while you still have the most options available. However, even after the foreclosure has been filed, an attorney may find a basis to challenge the foreclosure action or be able to negotiate a resolution on your behalf. If these options do not work, a bankruptcy can also stop the foreclosure and may allow you to keep your home.

One new defense for homeowners in foreclosure resulted from a ruling last October by Federal Judge Christopher Boyko in Cleveland. In October 2007, Judge Boyko ruled that a foreclosing lender had not filed the proper paperwork to support its right to foreclosure on fourteen Ohio homes (Judge Christopher A. Boyko, Opinion and Order, In re Foreclosure Cases, Case 1:07-cv-02282-CAB, U.S. District Court, Northern District of Ohio, Eastern Division, filed 10/31/2007 ). Previously, many courts let this slide and banks and lenders were often permitted to bypass the requirement to produce the original mortgage note by simply filing a "lost note affidavit" attesting that the original note could not be located and then proceed with foreclosure. Judge Boyko's ruling provides a basis for homeowners to challenge the lender's right to the security (your house) and potentially stay or stop the foreclosure proceedings if the lender cannot produce the original mortgage note.

Since Judge Boyko's ruling, several judges in other jurisdictions have followed suit and required lenders to produce the original mortgage note in order to proceed with their case. Due to the common practice of lumping mortgages together and selling them as mortgage-backed securities, many lenders are not the originator of the mortgage and are, therefore, unable to produce the original note, providing a basis to challenge the foreclosure. Notably, it has been reported that Ohio Attorney General Marc Dann is challenging the ownership of mortgage notes in as many as forty cases in Ohio.

If you are facing foreclosure you are certainly not alone. Foreclosures in Ohio rose eighty-eight percent in 2007. Recent developments in Ohio law as well as the increased willingness of lenders to resolve or "work-out" mortgage delinquencies make it more important than ever for homeowners to explore all of their options when facing the loss of their home.

To decide if bankruptcy is right for you, consult with an experienced bankruptcy attorney early in your decision process and as soon as you realize that you will not realistically be able to pay your bills or mortgage as they come due. Contact the law firm of J.M. Smith Co., LPA to speak with an attorney about your specific situation.

While it is true that filing bankruptcy will lower a high credit score, if you are one of the many people that have maxed-out credit cards, several late payments or your credit score is already poor, then filing for bankruptcy protection may actually help you improve your credit more quickly.

Better yet, it will do this with the added benefit of stopping harassment by creditors and giving you a fresh start. Part of the reason bankruptcy may improve your credit score (after you receive a discharge) is that you will eliminate your high balances and improve your debt-to-income ratio. Before filing, creditors may view you as an extreme credit risk due to a lot of consumer debt, little income and the possibility that you may file bankruptcy at any time after they extend you credit. Once you have filed and recieved a discharge, creditors will view you as having little debt, more disposable income and unable to file bankruptcy again for several years all of which make you less of a credit risk. For this last reason it is important that you use credit carefully and responsibly after you receive your fresh start through bankruptcy.

On the other hand, if you currently have excellent credit then you should consult with an attorney before you fall behind on payments to discuss your options and determine if a bankruptcy alternative, such as debt settlement, might work for you. Keep in mind that if you wait until you are already behind you may reduce the options available to you.