Typically, most people who call my office are seeking to file bankruptcy under Chapter 7. Unlike Chapter 13, which forces individuals to pay debts over a 3-5-year period, Chapter 7 allows them to eliminate debt without monthly payments. While Chapter 7 is better for most, not everyone is eligible to file under that Chapter. Here are some factors your bankruptcy attorney will consider before recommending Chapter 7 to you.
To determine your eligibility, your attorney will first use the means test. This test looks at your income over the past 6 months. Generally, those with high incomes will not be allowed to file Chapter 7.
The means test then factors in your family size and certain expenses to determine whether your bankruptcy would be presumed an abuse of the system. Even if it is not presumed abusive, you still might be ineligible if your current income is too high and/or current expenses are too low. Many refer to this 2nd test as the “totality of circumstances” test.
If you have assets that are valuable and cannot be declared exempt, they could be seized by a Chapter 7 Trustee when you file bankruptcy. Make sure you disclose all assets to your attorney if you are seeking to file Chapter 7. Failure to list all assets in your bankruptcy can result in criminal prosecution.
Prior Bankruptcy Cases
The Bankruptcy Code requires you to wait to file Chapter 7 if you filed for bankruptcy before. You cannot file Chapter 7 if you have received a discharge through a Chapter 7 case that was filed within the past 8 years or through a Chapter 13 case that was filed within the past 6 years. In some rare cases, you may not need to wait 6 years if your Chapter 13 paid enough to your unsecured creditors.
You cannot file bankruptcy until you provide a form that confirms your completion of a mandatory credit counseling course. Additionally, your bankruptcy case will be dismissed if you don’t provide the court all paystubs you received within the 60 days prior to your bankruptcy. Your bankruptcy could also be subject to dismissal if you are not able to provide your Trustee with other important documents, such as recent tax returns, recorded copies of mortgages, property tax statements, and recorded copies of deeds. Because of these risks, your bankruptcy attorney may refuse your case if you don’t provide sufficient documentation.
Contact Us Today to Get Started
When you retain the legal services of Sapinski Law Office, S.C., you can trust me to guide you through the process with honesty, transparency, and care. I will only recommend debt-relief strategies I believe will be the most effective for your specific financial situation. I have handled thousands of bankruptcy cases, and, through this experience, I have learned exactly what it takes for a debtor to achieve the financial freedom they need.