Bankruptcy
Chapter 7
A Chapter 7 will discharge most debts, including credit cards,
medical bills, and loans. Child support, spousal maintenance, most taxes, student loans, and some divorce property settlements
(or agreements to indemnify the other spouse) are not dischargeable. In order to qualify for Chapter 7, you need to either
show that you are below the median income for a family of your size, or otherwise pass a somewhat complicated "means test". If you are over the median income, the
means test, in a nutshell, compares your income to standardized expenses (see links below) to see if you can pay $10,000 ($166.67
per month) or 25% to your unsecured creditors in a chapter 13.
Other requirements of the 2005 Bankruptcy Act is that you need to go at least do
a consultation with credit counseling program prior to filing, and go through a budgeting program prior to getting your discharge. We generally recommend meeting
with an attorney before going through a credit counseling program due to certain timelines the Act requires.
Under state and federal exemption laws, you can almost always
keep your house, your car, household furnishings, clothing, and sometimes up to $20,000 ($10,000 per person) of other miscellaneous
assets, including cash, bank accounts, and tax refunds. You will almost always need to keep making the payments on your house
or car. I will need to talk to you in more detail to determine whether it will be more beneficial to you to utilize state
or federal exemption laws; this, in turn, will affect which assets you can keep. Before your case is filed, you will know
exactly whether we think there is any realistic chance that you might have to turn over any assets.
Chapter 13
People usually file Chapter 13 when they have mortgage arrears,
taxes, back child support, a prior case filed within the last eight years, or excess income which does not allow them to file
for Chapter 7. In a Chapter 13, you make monthly payments to a trustee.
We help people consider their financial options, and when
feasible, we help people file for relief under chapter 7 and chapter 13 of the Bankruptcy Code.
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