Chapter 7 Bankruptcy Gives You A Fresh Financial Start
Bankruptcy can be a great tool to reclaim control of your finances. If you are thinking about bankruptcy, you may wonder what the difference is between the types of bankruptcy and which one is best for you. Chapter 7 is one of the most common forms of bankruptcy for individuals because it helps people wipe the slate clean. You must qualify for Chapter 7 based on an income test, so it may not be appropriate for everyone.
At Law Office of Curtis M. Garner & Associates, LLC, we understand what you are going through. We have years of experience helping clients through bankruptcy, using personal attention to find an effective solution for each situation. We are ready to help you decide if Chapter 7 is the right option for you.
Do You Qualify For Chapter 7?
Because Chapter 7 completely eliminates some debt, you must meet certain qualifications for this form of bankruptcy. People sometimes refer to these qualifications as a “means test.” Chapter 7 is meant for low and average wage earners. We may recommend high-income earners who cannot pass the means test to consider Chapter 13 bankruptcy.
The first step of the means test compares your income to the state’s median income. If your income is less than the median income in Missouri, you automatically qualify and do not need to complete the rest of the test. If your income is above the median, you must complete the rest of the test. The second part of the test compares your monthly income to your expenses to determine how much you have left to pay your debts. If you still have a considerable amount of extra money to pay your debts, you may fail the means test.
Another important question you need to answer is whether your debts are dischargeable in bankruptcy. Most debts discharged in Chapter 7 bankruptcy consist of unsecured debt. That means debt not backed by collateral. Examples of unsecured debt include medical bills, credit card debt and personal loans. However, not every financial obligation is dischargeable. You may not discharge the following:
- Recent income tax debt
- Student loans (unless you can show they cause an undue hardship)
- Court-ordered obligations, such as child support, lawsuit damages, or criminal fines and penalties
These are just a few examples of nondischargeable debt. When you meet with attorney Curtis Garner, he will help you understand all of your debts and discuss whether you can keep your home and car, which may be exempt.
The Filing Process Requires Careful Planning
The means test is only one step in the process of filing bankruptcy. The court averages your income for the past six months, so you will need to gather and organize all your financial information. At Law Office of Curtis M. Garner & Associates, LLC, our dedicated and responsive staff will help you prepare for filing and go through each step of the process with you, explaining what debt you may liquidate and whether any of your property is exempt. The process can take several months to conclude, but you can begin rebuilding your credit as soon as the court discharges, or wipes out, your debt.