The Means Test For Chapter 7
To be eligible to file Chapter 7 bankruptcy, you must pass the means test. The means-test requires borrowers to earn below a specified income. The income is based on the median income of similar household size. The median income is determined by the U.S. Census and is updated frequently.
The test is designed to weed out those who âneedâ bankruptcy from those who donât. It was developed to keep people from abusing Chapter 7â bankruptcy. You only have to pass the means test for Chapter 7 bankruptcy. Borrowers seeking relief under Chapter 13 will not be required to pass the means test. Additionally, the means test may not be applied in your case if you are a disabled veteran. Also, you may be exempt if your debt is primarily business-related debts, as opposed to consumer debts.
Learn More About Filing For Bankruptcy
Below you will find links to information about topics that are important to people considering bankruptcy. When you hire our firm, we will take the time to answer all your questions and make sure that you have all of the information you need to make the best decision for your situation.
Resources for people considering bankruptcy:
Can I File For Bankruptcy Without My Spouses Knowledge
Yes, it would be possible for one spouse to file for bankruptcy without the other partner ever finding out. However, Chapter 7 bankruptcy uses income as a test for eligibility and utilizes income garnishment as a means of settling debt. The non-filing spouse will certainly notice if the bankruptcy court for debt repayment is garnishing their paychecks.
Even outside Chapter 7 bankruptcy, there are plenty of other ways for a spouse to discover his or her partners financial situation. Hiding bankruptcy is a temporary solution at best and is not healthy for any marriage.
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Helping Florida Families Through Complex Bankruptcy Matters
One of the most frequent questions that married people ask when they are considering their debt relief options is, What will happen to my spouse if I file for bankruptcy? Unfortunately, there is not an easy answer to that question. It depends on your personal circumstances and whose name is on which debts.
At the;Price Law Firm;in Orlando, we represent clients in all types of consumer bankruptcy matters, including;Chapter 7;and;Chapter 13.;Our lawyers;help clients throughout central Florida in a variety of consumer bankruptcy matters, including Chapter 7, Chapter 13 and foreclosure issues. When you hire our firm, we work tirelessly to help you find the debt relief solution that helps you achieve your goals and protects your family to the fullest extent possible.
Bankruptcy Is Good Business
Have you ever wondered why major corporations file bankruptcy all the time to save money and generate revenues but when a consumer considers bankruptcy they are told not to do it? That is because powerful corporations don’t want to let you in on the secret, that bankruptcy is good business. There are a number of ways that bankruptcy can be good business for you. They are:
- Bankruptcy eliminates debt.
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Bankruptcy stops negative reporting on credit.
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Bankruptcy can save your home.
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Bankruptcy can keep you in your home longer even if you don’t want to save it. The money you will save in not paying rent will be substantial.
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Bankruptcy can stop debt collection harassment.
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Bankruptcy creates a protection zone for you from creditors.
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Bankruptcy allows you to collect damages from debt collectors and corporations that are pursuing bad claims against you.
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Bankruptcy allows you to sue zombie debt collectors who keep calling even after you have wiped out the debt;
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Bankruptcy is the first step back to great credit. Bankruptcy gets you out of the bad credit quicksand and reboots your credit report. Not only do you set the floor with bankruptcy, you also now have the chance to get your score to A+ territory.
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Bankruptcy can make you a homeowner again. Many major lenders are qualifying homebuyers 1-2 years after bankruptcy for low interest home loans.
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What Is Chapter 13 Bankruptcy
Chapter 13 bankruptcy is the process by which an individual is allowed to undertake a reorganization of their finances. An individual can seek Chapter 13 bankruptcy when they have sufficient income to make payments to their creditors under a repayment plan.
In a Chapter 13 proceeding, the debtor begins making payments to a trustee appointed by the bankruptcy court. The debtor must also present the court with a proposed repayment plan lasting either three or five years. The plan must be approved by the debtors creditors. It can also be approved by the bankruptcy court, over the objections of creditors, so long as the plan meets the requirements under Chapter 13.
Under a Chapter 13 repayment plan, a debtor can:
- Consolidate debts
- Pay back taxes over time
- Partially repay unsecured debt
If the debtor makes all payments required under the repayment plan and meets other requirements, the bankruptcy court can discharge outstanding debts, including some debts that cannot be discharged in a Chapter 7 bankruptcy. Chapter 13 bankruptcy also has the benefit of allowing a debtor to keep most or all of their property and assets which would sold off in a Chapter 7 liquidation even though the debtors creditors are likely to receive less than the outstanding balances owed by the debtor.
What If We Want To Apply For Joint Loans Or Credit Accounts Together In The Future
You and your spouse will still be able to apply for joint loans or credit accounts in the future. For a while, your bankruptcy filing may impact your ability to get a joint loan with good terms. But, most people with poor credit who file for bankruptcy see their when compared to people with poor credit who remain in debt. So, as you rebuild your credit score, you’re ability to get favorable terms on new loans will increase as well.
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I Can’t Live Without A Credit Card What Am I Going To Do
For many people, credit cards cause more harm than good. They lead to impulse buying and mask the real pain of paying cash or even writing a check. Many people think they cannot live without a credit card, but anthropologists have dug up some ancient bones and discovered there was life before Visa. For an alternative option, consider the debit cards available at Walmart with fairly low fees and no credit check. You can also search online for prepaid credit cards or secured credit cards. You pay some money in advance and you get a credit card for that limit amount. Itâs not really a credit card, because the bank already has your money, but it allows you to pay for things online, rent cars, etc.
The Three Types Of Bankruptcy
Chapter7: Commonly called liquidation bankruptcy. Chapter 7 involves the sale of non-exempt property to repay creditors. Not everyone is eligible for Chapter 7, as there are specific income limits that must be met.
Chapter 13: Also known as a reorganization bankruptcy. Chapter 13 involves the creation of a three to five-year payment plan to repay your debts. If you comply with your repayment plan, you should be allowed to keep your property and discharge the debt.
Chapter11: This type of bankruptcy differs from Chapter 7 and Chapter 13 because it is designed to aid struggling businesses and corporations. The company typically continues to operate, but their finances are restructured to maximize repayment to creditors.
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How Much Does Bankruptcy Cost
There are three parts of the cost of filing bankruptcy:
The filing fees are $335 forChapter 7 and $310 forChapter 13. The cost of the two sessions of required financial counseling is about $60 total or $80 for a couple.
The attorney’s fee we charge depends on how simple or complicated your case is. People often ask us to quote a fee over the phone for a bankruptcy case before we have even met with them. It’s not possible to give a sensible answer to that question until we have at least met with you and understand your situation. But if you read our client reviews we think you will see that our clients are very happy they came to us and several reviews specifically mention that our fees are reasonable.
What Else Should I Know
Utility services:;Public utilities, such as the electric company, cannot refuse or cut off service because you have filed for personal bankruptcy. However, the utility can require a deposit for future service and you do have to pay bills which arise after bankruptcy is filed.
Discrimination:; An employer or government agency cannot discriminate against you because you have filed for bankruptcy. Government agencies involved in student loan programs also cannot discriminate against you based on a bankruptcy filing.
Drivers license:;If you lost your license solely because you could not pay court-ordered damages caused in an accident, bankruptcy will allow you to get your license back.
Co-signers:;If someone has co-signed a loan with you and you file for bankruptcy, the co-signer may have to pay your debt. If you file under chapter 13, you may be able to protect co-signers, depending upon the terms of your chapter 13 plan.
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How Common Is Bankruptcy
Bankruptcy is more common than you may think. In 2018, there were 755,185 bankruptcies filed in the United States. Studies show the average American now has approximately $38,000 in debt. For June 2019, there were 852 new bankruptcy cases filed in Tampa alone. Medical bills are a significant factor in the number of bankruptcy cases filed. A study by the American Journal of Medicine found that 62.1% of all bankruptcy cases are attributable to medical reasons. Further, the study found that 92% of the people filing bankruptcy for medical reasons had over $5,000 in medical debt.
Can I File Bankruptcy Without My Spouse Knowing
If youre wondering How can I file bankruptcy without my spouse knowing? then there are lots of things to consider. First and foremost, its usually not a good idea to keep something as big as bankruptcy a secret from your spouse. Depending on how you file, you could inadvertently leave your spouse on the hook for some outstanding debts. If youre considering filing bankruptcy without your spouse knowing, its best to consult a bankruptcy attorney first.
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When Doesnt It Make Sense To File Without Your Spouse
Itâs rarely clear cut whether it makes sense to file with or without your spouse and in the end it depends on your financial situation and what state youâre filing in.
Here are a few common reasons folks want to file without their spouse that donât really hold up when you look at the full picture:
You donât want to impact your spouseâs credit : Unless they stay current and pay off all joint debt, their credit score will be negatively affected by your bankruptcy. Plus, your bankruptcy discharge wonât protect them from debt collectors.
You donât want to include your spouseâs property in the bankruptcy estate : All your marital assets are part of the bankruptcy estate whether you file together or not. Even if youâre not in a community property state, if you have joint property filing alone may not be enough to protect your spouseâs property interests.
How Does Bankruptcy Affect Your Spouse
Assuming you file for bankruptcy without your spouse, after review by the trustee, and after either liquidation of non-exempt assets or partial repayment over three to five years , your debts are discharged. This means that bankruptcy eliminates your personal liability for debts as an individual.
However, your individual bankruptcy doesnt wipe out your spouses obligation to pay back his or her own debts or any joint debts you have together, which creditors may pursue against your spouse for the full amount. This is a strong reason to consider a joint bankruptcy filing if the circumstances warrant doing so.
One exception worth noting in Texas, a community property state, is that regarding debts you owe jointly with your spouse, creditors can only go after your spouses separate property after your bankruptcy. Since almost all property your spouse acquires during the marriage, including income, is community property, your spouse essentially will receive the benefit of your discharge as well for your joint debts. This is commonly referred to as a phantom discharge.
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Meeting The Bankruptcy Trustee
The bankruptcy court will schedule a meeting with an appointed Chapter 7 trustee. This meeting is called the;;or the;341 meeting. The meeting is held in a conference room, not a courtroom. Typically, this meeting will last ten to fifteen minutes.
A representative of the U.S. Trustees office sometimes attends these meetings. The debtor and his bankruptcy attorney are required to attend the creditors meeting . As a practical matter, very few, if any, unsecured creditors attend. The Chapter 7 bankruptcy trustee represents all creditors whether or not unsecured creditors attends the meeting of creditors.
The Chapter 7 bankruptcy trustee asks the debtor questions at the creditors meeting, but they will not interrogate, cross-examine, or threaten the debtor. The trustee may ask the debtor why they filed bankruptcy and ask questions;about the debtors assets;and sources of income. The trustee often asks about the debtors income and expenses to make sure the debtor qualifies for Chapter 7 bankruptcy and that the bankruptcy is not an abusive filing.
;are scheduled by the court based on the trustees schedule. Your bankruptcy attorney is not able to request a meeting date or time. If the debtor or their attorney is unable to attend the scheduled 341 meeting, the trustee usually schedules a make-up meeting approximately two weeks after the first date. If the debtor fails to attend the second meeting, the trustee may move to have the bankruptcy dismissed.
Why Do I Get Phone Calls And Letters From Collection Agencies
Sometimes collection agencies will pursue both spouses even though only one spouse owes debt. If you feel that the calls and letters asking for payment are only meant for your spouse but are still addressed to you, there are a couple of steps you can take to minimize the annoyance.
First, you should request proof of responsibility for those debts from the debt collectors bombarding you with collection demands. Assuming that the debt is solely to your spouses name, you can ask the collectors to stop.
If your spouse has already filed for bankruptcy, he or she can ask the bankruptcy court for an automatic stay to halt all collection activity.
If after your spouse has received your automatic stay and the creditor is still contacting or harassing your spouse about the debt, they should notify the creditor that;they have filed bankruptcy and all communications should be stopped. A bankruptcy lawyer can also assist you or your spouse in contacting the creditor to have them stop the calls or communication.
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Ready To File Work With A Bankruptcy Lawyer
Whether you want to file for bankruptcy on your own or with your spouse and whether your marriage is doing great or about to end, filing for bankruptcy when married makes things significantly more complex. To protect both spouses and to discharge your debts in the most efficient way possible, schedule a consultation with an experienced;bankruptcy lawyer;to decide the best way to proceed in your unique situation.
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Are You Filing For Divorce
Many couples choose to file bankruptcy prior to their divorce, or as a result of divorce. It is often advantageous to file as a married couple to eliminate the commingling of debt obligations, following your divorce judgment. If you are considering divorce, there are special rules that apply regarding your bankruptcy petition.
In most cases, married couples can save attorneys’ fees and court costs by filing jointly, as both spouses can list joint and personal debt on the schedule of assets, income and debts.
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Got Debt Pensacola Bankruptcy Attorney Erich M Niederlehner
Bankruptcy lawyer Erich M. Niederlehner has offices in Pensacola, Fort Walton Beach, Panama City to serve you. The law firm maintains this blog to help the citizens of Pensacola, Fort Walton Beach, Panama City and everywhere else understand bankruptcy, credit, debt, saving and other financial issues.
Executory Contracts During Chapter 7
An executory contract is a legal term referring to a contractual agreement in which both parties are obligated to perform in consideration for a benefit . Executory contracts do not include at will contracts such as an employment agreement or a personal service contract.
Chapter 7 bankruptcy permits the debtor, or the trustee, to assume or reject an executory contract. A debtor must decide if they want to remain bound by their executory contracts prior to the courts issuance of a bankruptcy discharge which usually happens about 90 days after filing.
A car lease is an example of an executory contract. If the debtor rejects a car lease, they surrender the car to the leasing company and have no further personal liability. If the debtor wants to assume the lease, the debtor can keep the property if they make the lease payments. If the debtor subsequently defaults in lease payments, the leasing company can take back the car.
Assumption of an executory contract is not the same as a reaffirmation of the lease, so the leasing company may not sue the debtor for the balance of payments due under the lease following default.
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