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Means Test

The What, When, Why – Chapter 7 and Chapter 13 Bankruptcy

Chapter 7 and Chapter 13 are two common bankruptcy programs available to individuals to discharge their debts. If you ever got confused between the two, here is a quick what, when, and why to help you learn their differences.

What is Chapter 7 Bankruptcy?

Chapter 7 bankruptcy is a liquidation bankruptcy. Your non-exempt assets are sold by the court trustee to repay your creditors.

When is Chapter 7 Bankruptcy Needed?

When your debt becomes completely unmanageable, and you want a quick discharge to restart your financial life.

Why is Chapter 7 Bankruptcy Important?

It helps eliminate the risk of debt trap that, otherwise, individuals could fall into if they can’t keep up with the repayments.

What is Chapter 13 Bankruptcy?

Chapter 7 bankruptcy is a reorganization bankruptcy. Rather than a discharge, your repayment schedule is reorganized based on what you can actually pay.

When is Chapter 13 Bankruptcy Needed?

When you are struggling to repay your debt but don’t want to risk losing any of your assets.

Why is Chapter 13 Bankruptcy Important?

It allows you to prevent foreclosure or selling off of your assets by creditors by making repayment more manageable.

#bankruptcy #US #legal #Chapter13 #Chapter7

5 Biggest Mistakes to Avoid with Chapter 7 Bankruptcy

Photo by Daniela Holzer on Unsplash

If you are struggling with a mountain of debt, a Chapter 7 bankruptcy allows you to resolve yourself of the burden and start your financial life on a fresh slate. However, there are a few pitfalls that one should take care to not fall into when filing for a Chapter 7 Bankruptcy if they want their expected case outcome not to be jeopardized. Here are the 5 biggest mistakes to avoid with Chapter 7 bankruptcy.

1. Filing Too Early or Too Late

Before filing for a Chapter 7 bankruptcy, it is often recommended to take into consideration all options on the table. Filing for bankruptcy is an important decision and carries with it serious consequences. It should only be taken once you are fully sure that there is no better alternative choice.

With that said, delaying the decision to file for bankruptcy when you clearly need it can also be harmful. If you are unable to manage your mounting debt, it is better to declare bankruptcy rather than continue suffering from poor financial health.

If you are unsure about when is the right time to file for your bankruptcy, consider consulting an experienced bankruptcy attorney.

2. Not Making a List of Your Debts

If you have multiple debts, it is a best practice to list them and includes in it their outstanding amount. Neglecting to do so before filing for bankruptcy could prevent you from realizing the outcome you were hoping for.

3. Selecting the Wrong Bankruptcy

Quite many debtors make the mistake of filling for Chapter 7 bankruptcy when a Chapter 13 could likely have been the better choice. For instance, one could be struggling to repay their mortgage but can still potentially avoid foreclosure if their repayment plan is readjusted through Chapter 13.

For more information on which bankruptcy to file for which occasion, click here.

4. Missing the Required Documents

This is a very common mistake that typically occurs when one is filing for bankruptcy without a lawyer. A lot of different documents may need to be submitted along with your bankruptcy petition. If a critical piece of documentation is found missing, it can delay your bankruptcy case or influence a more negative outcome. You can even be charged with bankruptcy fraud if the court mistakenly assumes your intent to have been malicious.

5. Not Hiring an Attorney

While virtually all debtors who file for Chapter 7 bankruptcy obtain a discharge, how much the outcome had been ruled in their favor is another question. If you are concerned about the cost of professional help, consider how much more you could lose in terms of property and assets if you approach the bankruptcy process alone.

The Law Offices of Sean T. Flynn provides personalized legal service and consultation to clients filing for bankruptcy under Chapter code 7 and 13. To schedule an appointment or for any queries, call 512.640.3340 or schedule your free 1-hour consultation today: https://seanflynnlaw.com/calendar/

—-Your Common #Bankruptcy Questions Quickly Answered—-

—-Your Common #Bankruptcy Questions Quickly Answered—-

1. Will I lose my house in Chapter 7 Bankruptcy?

In most cases, your house will most likely be exempted from being sold off in a Chapter 7 Bankruptcy case.

2. Can Bankruptcy take my social security?

As per Federal Law, your social security funds are exempt and thus protected in bankruptcy.

3. I am currently unemployed. Can I still file for bankruptcy?

Yes, your employment status does not bar you from filing for bankruptcy. It will, however, impact the chances of a successful outcome in a Chapter 13 bankruptcy.

4. Can my student loans be eligible for a bankruptcy discharge?

In most cases, your student loans are not eligible for a discharge under either Chapter 7 or Chapter 13 bankruptcy. However, it can be wiped out if you can prove that it is causing you undue hardship.

5. I make a lot of money. Do I still qualify for Chapter 7 Bankruptcy?

If your household income exceeds that of your state median, you may still qualify depending on how much are your monthly deductible expenses (e.g., childcare, taxes, debt repayments, utility, and food).

6. Do married couples both have to file for Bankruptcy?

Both you and your partner can file for bankruptcy individually or jointly. Depending on your debt situation and the state you reside in, either of the options could be more beneficial.

7. Will Bankruptcy affect my employment?

No employer will lay you off solely because of your bankruptcy, nor does it, in most cases, impact your employment prospects.

#bankruptcy #US #FAQs #Chapter7 #Chapter13

Bankruptcy Means Test – Find Out if You Qualify for Chapter 7 Bankruptcy

Many Americans see filing for Chapter 7 bankruptcy as a means to get rid of their high debt burden and restart their financial life on a fresh new slate. However, in order to be eligible for it, individuals have to first pass a bankruptcy means test. In simple terms, it is a formula to determine if your level of income is low enough for filing for bankruptcy. Having inadequate awareness or misconception about the means test, a lot of Americans fail to take advantage of filing for bankruptcy, assuming that they would probably not qualify. In this article, we will be offering a detailed overview of the bankruptcy means test and what it entails.

How it Works

The bankruptcy means test takes into account your current financial condition to check whether you can qualify for a bankruptcy discharge. The whole process can be relatively complicated. However, if your current income is below your state’s median income, you are deemed to have passed the test and don’t need to complete the rest of it.

However, if your present income is higher than the state’s median, don’t worry, there is still a chance that you might be able to qualify. However, a lot of factors will be taken into consideration in the assessment. Such can typically include your average net income for the last six months, any change to financial status e.g. loss of employment, expenses, and the number of dependents. This is to determine your leftover disposable income; if it is below a certain threshold, you qualify for a Chapter 7 bankruptcy.

What is considered ‘disposable income’ may vary depending on your location. Each county and metropolitan sets its own cost of living standards which is taken into the calculation to assess the amount.

Getting Started with the Process

To get started, you have to download and fill out a 122A-1 form, which you will have to submit to the court with the rest of your bankruptcy filing papers. You can download the form by clicking here. It is always recommended to fill out the information with the help of a lawyer so that there is less room for mistakes to happen.

If your income is found to be above the state median average, you will need to download and fill out a 112A-2 form as well. You will need a completed copy of the first form to fill in the details. You can download the second form by clicking here.

It is highly recommended to reach out to a bankruptcy lawyer if you have any questions or confusion regarding the form. Mistakes avoided while filling out the form can save you a lot of hassle later on.

Once you have submitted the forms, you’ll have to wait for the court decision. If you fail to pass the means test, don’t worry, you would still eligible for filing a Chapter 13 bankruptcy, which, while not giving a full discharge, can still make your debt burden more manageable.

Bankruptcy Mean Test Exemption

Dependent on certain conditions, some Americans may not need to pass a bankruptcy means test to become eligible. Disabled veterans meeting certain conditions are exempt from the mean test. In addition, reservists and members of the national guard on active duty may also be granted a temporary exemption. To qualify for an exemption, you will need to fill out and submit a supplement form along with your 122A-1. The form can be downloaded by clicking here.

Get A Fresh Start

Schedule a time to speak with an expereinced Bankruptcy Attorney today!