To File or Not to File for Bankruptcy | Bankruptcy Lawyer Melbourne, FL
Deciding on whether or not to filing for bankruptcy can be tough. You might know that you could lose your assets or be unable to take out a loan for a specific period of time. Your credit will be affected, but your unsecured debt may be forgiven or reworked into a practical
payment plan. With so many advantages, disadvantages, and things to consider, it is advisable to always speak with a bankruptcy lawyer in Melbourne, FL first from Arcadier, Biggie & Wood, PLLC. A lawyer can understand your unique situation and let you know what your best option might be – this may or may not include bankruptcy.
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Understanding the Means Test Before You File for Bankruptcy
If you are considering filing for bankruptcy, you may already be aware that you have two main options for filing for individual bankruptcy: Chapter 7 or Chapter 13. Each of these types of bankruptcy petitions have key differences to consider before deciding which one to file. One of the main differences is that Chapter 7 seeks to discharge certain types of debt, while Chapter 13 is aimed at constructing a repayment plan for a portion of the petitioner’s debt.
In order to qualify for a Chapter 7 bankruptcy, a petitioner must pass the means test. The eligibility requirements for this type of bankruptcy filing changed in 2005, making it more difficult to qualify. As a bankruptcy lawyer Melbourne, FL residents trust, we can explain the qualification requirements during your consultation. That said, the means test is essentially a calculation that takes a petitioner’s amount of debt and income into account in order to determine whether the petitioner can repay his or her debt. If the petitioner fails the means test, he or she will still likely have the option of filing a Chapter 13 bankruptcy petition.
The means test looks at the amount of the debtor’s excess monthly income in relation to the amount of unsecured debt to determine how much the debtor could potentially repay to creditors through a repayment plan. If the debtor passes the means test, it means that the debtor’s financial situation would not allow for the repayment of the debts. Bare in mind that some debts must be repaid, such as state taxes, your bankruptcy lawyer Melbourne, FL offers, will help you to understand this in further detail.
When a petitioner files for Chapter 7 bankruptcy, there are three forms they will receive from the court. The first form is the Chapter 7 Statement of Your Current Monthly Income (Form 122A-1). On this form, the petitioner lists all gross income they have received during the six months prior to the date they filed for bankruptcy. The amount is then compared to the median income for a family the same size in the petitioner’s state. If the petitioner’s amount of income is less than the state’s median they have passed the test and do not have to fill out the other two forms.
If their income is greater than the state’s median, they need to complete the second form, Chapter 7 Means Test Calculation (Form 122A-2). Here they will list all allowed expenses from their income, including housing costs, child care, utilities, insurance, and taxes. The calculations will show if the petitioner has any disposable income. If they do not have disposable income, they will likely qualify for Chapter 7 bankruptcy. If they do, then they may be able to file for Chapter 13. In this case, your bankruptcy lawyer Melbourne, FL respects will advise you on how to proceed.
Some petitioners are not required to take the means test, such as servicemembers engaged in active duty during certain periods, disabled veterans, and people with mostly business debt.
As a bankruptcy lawyer Melbourne, FL men and women turn to for financial advice, our firm has successful experience in filing both Chapter 7 and Chapter 13 bankruptcy petitions. For an immediate consultation with a bankruptcy lawyer Melbourne, FL provides, please call Arcadier, Biggie & Wood, PLLC.
Factors to Consider Before Filing for Bankruptcy
1.Know Your Options – There are two types of bankruptcy individuals can file: Chapter 7 and Chapter 13. With Ch. 7, your debts may be resolved within 3-6 months, but you may lose your personal property. Chapter 13 is a bit more complicated, but involves a repayment plan based upon your disposable income. Your debt may be reduced and you may get to keep your assets.
2.Learn About Alternatives – Not everyone is an ideal candidate for bankruptcy. There are alternatives that may be able to help you reduce your debt in a practical manner. A Melbourne bankruptcy lawyer can explain these to you during your initial consultation, if relevant to your situation.
3.Find Out If You Are Eligible – Before you file for bankruptcy you will have to meet certain requirements. For instance if you make enough income to pay off your debts through Ch. 13, you may not be able to file for Ch. 7. Furthermore if your debt is too high or too low, you may not be applicable for bankruptcy.
4.Understand Secure vs. Unsecured Debts – Not every type of debt is forgivable. For example alimony, student loans, tax debts, child support, and government loans will likely still need to be paid regardless of what type of bankruptcy you file for.
5.Find Out What Will Happen to Your Assets – If you are unable to make payments on a mortgage or car because of other debt, you may want to consider Ch. 13; otherwise, you could lose these assets from filing for Ch. 7.
6.Determine Whether or Not Your Credit Card Debt Will Be Relieved – Credit card debt is not always forgiven. This is especially true when you have lied on a credit card application or knowingly spent above your financial means.
7.Confirm Your Pension is Safe – Most states have laws that protect life insurance and pension plans from being affected by bankruptcy. You should confirm this with a bankruptcy lawyer in Melbourne, FL.
8.Find Out if Co-Signers Will Be Stuck With Your Debt – If you any of your agreements or contracts have a co-signer, it is possible that they will have to make payments on your debt. This can be a very serious matter so you will want to verify whether or not this holds true for your situation.
Do You Have Further Questions About Filing for Bankruptcy?
If you are in a position to consider Chapter 7 or Chapter 13 bankruptcy, you likely are facing complicated financial matters. Rather than trying to resolve this on your own, it is advisable to find out what options are available and whether or not bankruptcy is right for you. A bankruptcy lawyer Melbourne, FL trusts from Arcadier, Biggie & Wood, PLLC can provide you with legal advice that may help you to get your financial affairs back under control.