Bankruptcy - Chapter 7

There are two bankruptcy processes for an individual; Chapter 7 and Chapter 13.  We offer service for Chapter 7 which is where your debt is completely discharged.  Chapter 13 involves a more complicated process that involves a financial "reorganization" with payment plans over a number of years.

Your initial consultation will provide advice which is the best route to get you a fresh start.  Contrary to what you may have heard, most people are still eligible to file Chapter 7 Bankruptcy under the new bankruptcy law.

MEANS TEST ELIGIBILITY 

If you can pass the "means test" you can still file for Chapter 7 Bankruptcy.  The means test is simply a two part test to determine eligibility.  You need only pass one of the two tests to qualify.  Better yet, if you pass the first test, you don't need to take the second one.

1- MEDIAN INCOME

This test compares your average gross monthly household income for the last six months to the median average income for a household of the same size in the same county in which you reside.  If your gross income is at or below the average income for your county, you pass.  You are eligible to file for Chapter Chapter 7 Bankruptcy.

If your family income is less than the amount shown in the chart below you are a good candidate:

                                Single                                     $23,985

                                Husband & Wife                     $32,324

                                Husband & Wife w/1 child      $35,319

                                5 people total                        $43,047

Information provided only as a rough guideline - call for more details.

2-DISPOSABLE INCOME

This test deducts the average monthly expenses for a household the same size as yours in the county in which you reside to see if you have enough money left over at the end of the month to pay your unsecured creditors over a five year period.  In addition to these formulaic deductions, you can also deduct your actual montly house and car payments as well as certain other payments.

So here is where the second test gets a wee bet complicated.

a.  If you can pay a minimum of $10,950 ($182.50) a month, Chapter 7 is not an option.

b.  If you can pay a minimum of $6,575 ($110.00) a month and that is at least 25% of what you owe to your unsecured creditors, Chapter 7 is not an option.

Do you have questions or do you want to make an appointment in this area?

Call us at 714 680-8342 or use our contact form.