Bankruptcy in Ohio is governed under both the Ohio specific state bankruptcy laws as well as the federal laws that established the bankruptcy system in the United States. When you file bankruptcy in Ohio, what impact- if any- the filing has on your severance pay depends upon the chapter of bankruptcy you file
- • If your income from the severance pay and any other sources of money you have coming in is either below the Ohio median or if it is not enough to give you the money to pay something towards your debt and still have money left over to live on, you can qualify for a chapter 7. This involves turning over assets, which will be sold by a trustee in a bankruptcy sale. The money from the sale goes to pay off some of the debts you have outstanding. Any remaining debts (except those that are ineligible, like unpaid child support) are then forgiven. Your severance pay will not be affected in this case
- • If your income from the severance pay is too much to file chapter 7, then you will have to file chapter 13. This involves entering a repayment plan schedule that lasts between 3-5 years. Each month, a portion of your income (as determined by how much you make and your expenses) will be paid to a trustee who distributes it among creditors. This, therefore, will impact your severance pay
To determine the best course of action, and to determine your eligibility for bankruptcy, it is important you consult with an experienced lawyer for help.
Updated by: Kathleen Michon, J.D.