Understanding Chapter 7 Bankruptcy

Qualifying for Chapter 7 Bankruptcy

In order to qualify for Chapter 7 you will need to meet the income requirements. The first factor in determining if you qualify is looking at your income and the median income set for the state in which you live. If your income is equal or less than the median you will likely qualify as long as you meet the other requirements. If your income is greater than the median, you will have to pass the Means Test to see if you have any excess income. This is determined by a budget analysis which looks at your monthly required living expenses, taxes, and your income. If you have excess income, you won’t qualify for a Chapter 7 but may still be eligible for a Chapter 13 bankruptcy.

Will a Chapter 7 Bankruptcy Discharge All My Debts?

If you qualify for a Chapter 7 bankruptcy you will be able to get rid of most of your debt. Chapter 7 does not eliminate:

• Student loans, except extreme hardship cases
• Debts for most taxes
• Debts for alimony, maintenance or support
• Debts for fines, penalties or criminal restitution
• Debts for personal injuries caused by driving intoxicated
• Debts incurred fraudulently

Will I Lose My Home or Car if I file for Chapter 7 Bankruptcy?

Typically you can keep all of your property and your vehicle. As long as your car and mortgage payments are current, creditors usually offer reaffirmation agreements which allow you to keep the property and continue to make the scheduled payments on the loan. We can explain the process to you during your first consultation. Keep your home, keep your car, keep your personal belongings, but eliminate your debt—that’s our goal.

Stop Creditors From Harassing You

If creditors are bothering you at work, calling at all hours, harassing your family, friends and neighbors we can can put an end to that—immediately. Give us a call at (509)921-9500 or contact us today for a free consultation. After retaining our services we’ll provide a phone number you can give your creditors, and they can call us. We’ll keep the creditors off your back. Though there may be some debts that will require continued payment, for most debts you can stop paying your creditors immediately.

Eliminate Repossession Debts

After a vehicle finance company repossess your car, they auction it to reduce their loss. You are still responsible for the balance after the sale proceeds are deducted, called a ‘deficiency balance’. A Chapter 7 bankruptcy can eliminate your liability for the entire deficiency balance. Remove the risk of lawsuits and garnishments by filing a Chapter 7 bankruptcy.

Stop Garnishments

A Chapter 7 bankruptcy is one of the most effective ways to immediately stop garnishments. Garnishments can diminish your hard-earned income making it nearly impossible for you to afford basic necessities. By filing a Chapter 7 bankruptcy and stopping the garnishment, you’ll be able to use your income for more important necessities in life and start saving for your future.

Will Filing Bankruptcy Stop a Lawsuit?

A lawsuit is a way for a creditor to get a court to issue an order, or judgment, that says money is owed the creditor and what that amount is. When someone files a bankruptcy case, an injunction called an “automatic stay” is activated immediately. The stay stops a creditor’s attempt to collect the debt from the debtor. But automatic stays have limitations. They’ll only put an end to litigation involving debts that can be discharged in the bankruptcy. If you’re being sued, and you own a home, we strongly urge you to speak with a lawyer immediately about filing bankruptcy. A bankruptcy will prevent your creditors from placing a lien on your home or garnishing your hard-earned wages.

Can Filing Bankruptcy Help Get My Driver’s License Back?

It depends on why your driver’s license has been suspended or revoked. Under certain circumstances, the filing of a bankruptcy case can help reinstate a suspended driver’s license. We can help you get your license reinstated if it’s suspended due to an uninsured car accident or unpaid parking tickets. Our attorney can also stop lawsuits related to those car accidents.

The Stigma of Bankruptcy

One of the most common concerns we hear about has to do with the stigma related to bankruptcy. This stigma has greatly diminished over the last 20 years, and there is no indication that debtors will be treated less favorably in the future. The ability to reestablish credit after bankruptcy is better than it’s ever been. Many consumer debtors receive credit card solicitations within months of receiving a bankruptcy discharge.

Rebuilding Your Credit After Bankruptcy

Though bankruptcy can remain on your credit report for up to 10 years, you can start reestablishing your credit immediately. A good way to begin is by getting a secured credit card. A secured card will require a deposit which acts as your credit limit. Make small purchases each month and pay them off, on time. Many of our clients are able to purchase a vehicle on financing the day they receive their bankruptcy discharge. Be aware that you will pay a higher percentage than a person with unblemished credit, but ask yourself how low of an interest rate you’d be able to get in your present situation? It’s possible to be able to finance a home as soon as two years after receiving a bankruptcy discharge, as long as you can provide a minimum down payment and show the ability to make the monthly mortgage payment. Most mortgage lenders and automobile finance companies are more than happy to keep accepting your current monthly payments both before and after a Chapter 7 bankruptcy. A “reaffirmation Agreement” is prepared, signed and filed within a chapter 7, which excludes the debt from the discharge. Since you aren’t able to file bankruptcy for another eight years, they know they’ll be able to continue collecting the principal plus interest under the original loan agreements.

Credit Union’s Do It Differently

If you have a debt owed to a credit union, such as a credit card or a car loan, and also have a checking or savings account through the same institution, you need to bring this to your attorney attention so you can get advice as to how to deal with the legal recourse of filing bankruptcy. Credit Unions have a cross-collateralized interest in your checking and savings account and may choose to freeze your account until you reaffirm their debt. If you do not want to reaffirm your debt to the credit union, you may need to close that account and open a new bank account with a different institution or risk losing your funds held by the creditor.