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Sunday, May 31, 2020

Do I Qualify for Chapter 7 Bankruptcy?

There are two primary types of consumer bankruptcy filings: Chapter 7 and Chapter 13. Chapter 13 bankruptcy is referred to as a reorganization bankruptcy as it really is a way to restructure debts in a way where the debtor can comply with a monthly payment plan. Chapter 7 is a liquidation bankruptcy where most general unsecured debts, including credit cards and medical bills, are cleared. Chapter 13 is for individuals who have enough monthly income to cover basic costs and have enough left over to comply with a payment plan. Chapter 7 is meant for individuals who do not have this kind of monthly income available. If you are struggling to meet your monthly bills and keep up with your minimum payments, Chapter 7 Bankruptcy may provide you with a much-needed lifeline to a better, more secure financial future. First, however, you must be able to qualify for Chapter 7 Bankruptcy.

Do I Qualify for Chapter 7 Bankruptcy?

The primary qualification for Chapter 7 Bankruptcy involves falling below a certain income limit. You must satisfy the means test to qualify for Chapter 7. The means test is in place to make sure people with higher incomes, who could comply with a Chapter 13 repayment plan, are prevented from filing Chapter 7. The means test determines whether your income is low enough for you to qualify for Chapter 7.

The means test calculation includes nearly all sources of income available to you. This means your salary or job wages, in addition to things such as interest and dividends, as well as rental income and household expenses covered by other people, will be included in the calculation. All allowed expenses are then subtracted from your income to determine whether your income is low enough that you do not have enough available to pay your unsecured creditors under a Chapter 13 plan.

Some people, however, are exempt from the means test. The means test is really applicable only to those prospective filers that are on the higher income level. If your income falls below the median level in Ohio for your household size, you are presumed to be exempt from the means test. Your average household income is calculated by averaging your monthly income for the past 6 calendar months. Additionally, if your outstanding debts are not mostly consumer debts, you are exempt from the means test. Also, disabled veterans who took on debt mostly during active duty or while engaged in homeland defense work are also exempt from the means test.

Miami Valley Bankruptcy Attorneys

Bankruptcy can provide much-needed relief to those suffering under unrelenting financial pressure. Chapter 7 bankruptcy may be the best option for you. Remember, however, that just because you qualify for Chapter 7 does not necessarily mean it is the best fit for you. Bankruptcy laws are complex and all of your options should be carefully weighed. Talk to the knowledgeable Bankruptcy attorneys at Miami Valley Bankruptcy. We will provide you with the information you need to make the best choice for your financial future. Contact us today.


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Miami Valley Bankruptcy, Brian Lusardi, Esq., assists clients with Bankruptcy matters including but not limited to: Common Myths, Cost of Bankruptcy, Chapter 7 Bankruptcy, Chapter 13 Bankruptcy, The New Bankruptcy Law and Personal Bankruptcy in Xenia, Ohio, and the cities of: Wilberforce, Alpha, Spring Valley, Dayton, Bellbrook, Yellow Springs, Cedarville, Fairborn and Clifton; and the counties of Greene and Montgomery.



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