A bankruptcy discharge can ruin your credit score, embarrass you, and even cause you to lose some of your possessions. As such, most people use bankruptcy as a last resort. However, if you have confirmed that you have no option but to file for bankruptcy, take advantage of the process and enjoy the following benefits.
Bankruptcy can help you delay or avoid foreclosure. The court will issue an automatic stay that informs your creditors to stop their debt collections efforts immediately. Thus, if your mortgage lender was about to start or had started the foreclosure process, the automatic stay will cause them to stop the process. The automatic stay exists both for chapter 13 or chapter 7 bankruptcy.
The delay in foreclosure can help you in several ways. For example, chapter 7 bankruptcy can discharge some debts and help you focus on your mortgage payments. Chapter 13 bankruptcy may wipe out your second and third mortgages and help you reorganize your primary mortgage repayments. Your circumstances determine whether bankruptcy can help you keep the home.
Stop Wage Garnishment
Creditors sometimes get court orders to garnish wages or income to recover loans. If your creditors succeed with such an effort, the authorities will divert some of your paycheck or income to your creditors.
Such involuntary payments of wages can wreck you financially because it denies you the chance to budget with your income. For example, you may lack money for emergencies that may arise, like a broken-down car, even though you would normally be able to cover the cost with your full income. A bankruptcy filing can help you avoid such wage garnishments so that you don't have to suffer.
Learn From Credit and Debt Counseling
Credit and debt counseling are an integral part of the bankruptcy discharge process. The primary reason for credit counseling is to determine whether you are a good candidate for bankruptcy. The course will help you understand your finances, debts, and alternative repayment options. This knowledge is invaluable for those with limited financial skills and experiences.
Debt counseling provides you with financial management tools to help you succeed with the bankruptcy. If you file with your spouse, each of you goes through credit and debt counseling. Take advantage of these classes to improve your financial literacy.
End the Cycle of Debts
One of the worst things about debt is that it is cyclic; debt often causes more debt. For example, if you are up to your ears in credit card debt, you may be tempted to borrow money from other sources to pay off the debt. After that, you may need more debt to clear your latest loan.
In such a situation, the more debt you pay, the more debt you accumulate. You also can't save enough money to learn a trade, go to school, or start a business. A bankruptcy discharge gives you a way out to wipe the slate clean and start afresh. You can leave your financial problems behind if you don't repeat the same mistake that got you into trouble in the first case.
Discharge Obligation to Repay Debts
One of the best things about bankruptcy is that it discharges your obligations to pay off some of your debts. For example, a chapter 7 filing can help you get rid of your credit card debts. Even if you don't get rid of all debts, which is usually the case, a bankruptcy filing can help you modify your debts.
Debt discharge or modification is a great benefit if you are truly unable to pay back your debts. If nothing else, a debt discharge or modification can help you save the money you earn and do something useful with it.
Bankruptcy is a complicated legal process with long-term ramifications. The Michelson Law Office can help you avoid bankruptcy or get a discharge depending on what you want and what is possible. Contact us the moment you start to think of bankruptcy because early intervention yields the best results.
Referred to as the wage earner's plan, chapter 13 bankruptcy requires you to make payments to your creditors for three to five years. In exchange, you don't have to liquidate any assets, and you can avoid foreclosure on your home. However, you need to make sure you make your payments as directed by the courts.
Worried about staying current with your chapter 13 debt repayments? Use these tips to stay on track.
1. Reschedule Secured Debts
A secured debt refers to any loan backed by collateral. For instance, car loans and mortgages are both secured debts. To keep your monthly debt obligations as low as possible, work with your bankruptcy attorney to reschedule your secured debts. The options vary depending on your situation, but you may be able to catch up on late payments slowly or even reduce what you owe through a cramdown process.
Imagine you are $5,000 behind on mortgage payments. Your lawyer may be able to convince the courts to let you pay that $5,000 in increments over the course of your payment plan so you don't have to worry about coming up with a lump sum all at once.
With car loans, you may be able to rearrange matters so that you owe the current value of the vehicle. For instance, if you owe $12,000 but have a vehicle worth $10,000, you may have to pay only the $10,000.
2. Consider Selling Some Secured Assets
If you don't want to continue making payments on your secured assets, you have the option of selling them, and you may want to consider this route if you worry about making your monthly payments. For instance, if your mortgage is $3,000 per month, yet you can comfortably live in a rental for $1,500 per month, you may want to consider that switch to free up more money in your budget.
3. Keep a Cushion for Emergencies
To ensure you always have money for your payments, build up a cushion for emergencies. This money should be in cash or in a very liquid asset such as a money market account. Then, if you can't make a payment out of your paycheck, you can take the funds from your savings.
4. Cut Expenses
To free up extra money in your budget, you may want to cut expenses. Take some time to go through your budget and identify areas where you can save. You may want to cancel cable and choose an inexpensive streaming service, lower your thermostat by a degree in the winter, or cook more and eat out less.
5. Prioritize Your Debt Repayments
Unfortunately, when you don't make your chapter 13 debt repayments on time, the courts have the right to dismiss your case. If that happens, you lose the protections granted to you by bankruptcy, and your debtors may start to pursue other collection activity. To ensure that doesn't happen, make sure you prioritize your debt repayments. Ideally, you should make the payments as soon as you get paid and before you do anything else.
6. Talk With Your Trustees
That said, you may face situations where you simply can't make your payments due to changes in your income. If you experience an interruption in your income, contact your bankruptcy trustee as soon as possible. Talk with them about the situation and see whether you can get your repayment plan paused or adjusted.
7. Choose a Quality Bankruptcy Attorney
Your bankruptcy attorney is going to have a direct impact on the structure of your repayment plan. To make sure that you get a plan that really works for your situation, you should hire a quality attorney. At the Michelson Law Offices, we have helped people with debt and bankruptcy for more than 30 years. We are committed to getting you the results that work for your situation. To learn more, contact us today.
If your debt level feels unmanageable or if you're at risk of losing your car or home, filing for bankruptcy is a solution to alleviate the financial stress of your debts and make your monthly payments more manageable. Two types of bankruptcy are available for individuals: Chapter 7 and Chapter 13.
Chapter 7 bankruptcy requires you to turn over non-exempt assets to the bankruptcy trustee. The trustee liquidates and uses the assets to pay portions of your debt. The trustee dismisses the remainder of your debt, giving you a fresh start.
Chapter 13 bankruptcy works differently. In exchange for the ability to keep your assets, you must pay back a portion of your debts over three to five years. Your income, assets, and types of debt dictate the length of your plan and your monthly payment. An experienced bankruptcy attorney can assist you in determining which type of bankruptcy is best for your specific situation.
If you have considered bankruptcy, you may wonder if this will affect your taxes, including your ability to receive a refund. Keep reading to learn important information regarding your taxes and filing for bankruptcy.
What Bankruptcy You File Determines the Tax Returns You Need
To file for bankruptcy, you must have certain pieces of information on hand and provide specific financial documents when your attorney submits your filing petition. Be prepared to include copies of your tax returns when filing for Chapter 7 and Chapter 13 bankruptcy. How many years of returns that you must provide depends on which type of bankruptcy you file.
When pursuing Chapter 7 bankruptcy, your filing documents typically require you to include returns for the previous two tax years. Chapter 13 requirements state that you must supply tax returns for the previous four tax years. Since Chapter 13 requires some level of debt repayment, you must file your taxes to determine if you owe federal or state income taxes.
If you've neglected to file tax returns in recent years, begin the filing process as soon as possible. Your bankruptcy trustee will reject your filing petition if you don't include the necessary documents.
When You File Can Impact Your Ability to Keep Your Refund
When you file your bankruptcy petition can influence whether you lose your tax refund. Should you file for bankruptcy after receiving your refund, you'll likely get to keep it. Be prepared to prove how you spent the refund. Ideally, you should spend the refund on necessary expenses.
You can also use your exemptions for personal property to exempt the amount of the refund. Should you file for bankruptcy later in the year and anticipate receiving a refund, the trustee may consider the refund additional income and order you to hand over the refund when you receive it.
What Options You Have to Preserve Your Tax Refund
In Chapter 7 bankruptcy, once the trustee discharges your debt, no future impact on your tax refund exists. However, due to the duration of a Chapter 13 plan, the trustee may order you to turn over your tax refund.
The thought process behind this is that a Chapter 13 plan requires you to use all your disposable income to repay your debts. If you've gone the whole year without your tax refund, the trustee may view the funds as disposable.
However, you have a couple options to save your tax refund.
The first solution is to change your tax withholding so that you receive more money in your paycheck each month, decreasing the amount of your refund or even eliminating it.
Another possibility is to provide documentation that proves you depend on your tax refund to pay your bills. For example, if you need your refund to make home or auto repairs, provide proof of these repairs to your bankruptcy trustee. The goal is to show the trustee that the funds are necessary for you to cover your expenses.
Concerned about your ability to repay your debt? Call The Michelson Law Office to schedule your free consultation.
Debt can build up slowly with a credit card bill that continues to increase or a student debt balance that never seems to drop. Other times, debt takes over instantly with an unexpected job loss or a medical emergency. Either way, daily life may seem impossible once your expenses surpass your income.
Overwhelming debt is more than a financial problem. It can become a social and health issue as well. People with financial problems lose sleep and go into depression. Sadly, overdue bills, collection notices, and potential foreclosures will not go away on their own. Everyone must do all they can to correct their financial problems.
Have you done enough to resolves your debt problems? Use the following tips to help you get back on track.
Recognize the Reality
Many people in a financial crisis ignore their phone calls and refuse to open their mail. Some simply send minimum payments or a part of the amount due and hope it will silence the creditor for a few weeks. But you can easily make mistakes if you try to ignore your financial situation.
You should avoid mistakes that make debt grow larger. If you are suffering from debt, you should have a clear list of what you owe in total, what you owe per month, and how your monthly income compares. You can find solutions only if you are organized and honest to yourself about the challenge you face.
Consider Debt Consolidation
Debt consolidation through a loan or with the help of the funds in a 401k will not make debt disappear. The loans make it possible to lower interest rates for a smaller monthly payment or help to pay off debt sooner. But you may not get approval for a loan when you are already behind on bills or your credit score has dropped due to delinquent payments.
A loan from a 401k may be more feasible to some, but it is not a good idea for everyone. If you are close to retirement, it could be risky to take money away from your retirement account. Also, you could still struggle to pay back the loan, and non-payment will result in a large tax bill and possibly an early withdrawal penalty.
Contact Your Creditors
You likely want to avoid creditors when you can’t pay a bill, but the lack of communication will not make the problem go away. Some creditors will not negotiate and prefer to send the account to the collections department. However, many creditors are happy to work with their clients to lower rates, extend the terms of a loan, or to settle the amount.
Make Some Changes
Anyone in debt must accept the fact that they must earn more and spend less. Consider getting a second job or doing freelance work, or you can ask your employer if you could work overtime. Sell unnecessary items and use the proceeds to pay down debt or to save more money. You could also buy groceries in bulk or pay an insurance policy upfront and avoid processing fees.
Create a tight budget and follow it. One of the biggest expenses Americans can make is on food. The USDA estimates that a family of four should only spend $195 per week on a low-cost grocery plan, or $148 each week on a thrifty plan. Try not to exceed these numbers and eliminate all fast food, dining out, and morning drive-thru coffee stops.
Sometimes the debt accumulates too fast or people wait too long to address the problem. Not all issues problems have a simple resolution. In some situations, bankruptcy may be the only option. At Michelson Law Office, we work with you to find the best solution that will let you have peace again. Contact us to learn more.
Your chapter 7 bankruptcy is more of a process than a single act. After your attorney files your bankruptcy with the federal court, the creditor's meeting might be your next step. This meeting, which is also referred to as a 341 meeting, can be a bit nerve-wracking for some filers. Know what to expect at your meeting and calm your fears. Read below to learn more.
What Is a Creditor's Meeting?
Many filers worry about facing a bankruptcy judge during the course of their bankruptcy, but that meeting never occurs. The creditor's meeting is not presided over by a judge, but by your bankruptcy trustee.
The meeting can take place in a courtroom, but it often takes place in a large conference room instead. The 341 meeting is a chance for the trustee to question you about your bankruptcy. In some cases, the meeting is also a chance for your creditors to appear.
How Should You Prepare for the Meeting?
If you come well prepared for the meeting, you'll also be more relaxed. Take the following steps prior to the appointment time:
Speak to your attorney about what else to bring with you.
What Should You Expect at Your Creditor's Meeting?
You might be surprised to find that other bankruptcy filers may attend your 341 meeting. Names are called alphabetically and you can observe other filers being questioned about their bankruptcies. Once called upon, you will rise and be sworn-in.
The bankruptcy trustee usually asks the same questions of all filers, but there are exceptions. You can provide ready answers if you ask your attorney what questions to expect. In most cases, the trustee asks the following questions:
What If My Creditors Appear?
In rare cases, creditors listed on the bankruptcy documents send legal representatives to the meeting. Take a look at two of the most common reasons a creditor will appear at your meeting:
As you can see, your 341 meeting is a fairly minor event. If you have questions about this meeting or any other aspect of a bankruptcy filing, contact us at The Michelson Law Office today.
Before you decide to file for bankruptcy, you should carefully evaluate and discuss with your lawyer the effects filing will have on your assets. If you do not do this, you might discover after filing that you will lose assets you did not expect to lose. Here are several important things to understand about assets in bankruptcy.
The Effects Depend on the Branch You File
The main thing to understand is that Chapter 7 and Chapter 13 bankruptcy have huge differences, but both branches offer benefits to people who file. If you file for Chapter 13, you will not risk losing assets you own. If you file for Chapter 7, you may lose your assets.
You must understand that you should not base your decision on which branch to use on this factor alone, though. In fact, when you meet with a lawyer, he or she will first help you determine which branch you qualify for. Secondly, the lawyer will give you advice about which branch would benefit you more. You should stick with choosing the branch your lawyer recommends.
The Differences Exist for a Reason
As you can see, each branch handles assets differently, and there is a good reason for this. When you file for Chapter 13, you are filing under a branch that still requires repayment of debts. This means that you will repay some or all of the debts you owe under a new payment policy. In exchange, you typically can keep the assets you have.
Under Chapter 7, you will not repay debts. Instead, the court will issue a discharge for any qualifying debts, which means the court forgives the debts. The tradeoff for this debt forgiveness is the risk of losing assets.
When the trustee receives your case, he or she will find a way to repay your creditors some of the money you owe them, and trustees will look closely at a person's assets for this purpose. If you have assets that could easily be sold for cash, the trustee will want to sell these assets to raise cash to pay off some of the debts the case discharges.
The Law Handles Some Assets Differently
Fortunately, though, rules exist that protect the person filing for bankruptcy, and these rules give a person the right to keep things that are necessities or things that have very little equity. For example, you can keep your car if you file for Chapter 7, as long as it meets certain guidelines. You can also keep your home, as long as you have little equity in it.
When you meet with a lawyer, he or she will examine all the assets you own in order to tell you what will most likely happen to them if you file for Chapter 7. The lawyer will aim to exempt the assets, which means the bankruptcy trustee cannot touch them. You can keep any assets that are considered exempt in your case.
Assets that typically fall into the non-exempt category are those you may lose in your case, and this often includes cash, investments, vacation homes, and expensive collections. Assets that fall into the exempt category typically include your house, car, appliances, furniture, clothing, and personal belongings.
Your lawyer will be able to give you more details about your assets and the categories they will fall into when you meet with him or her.
As you begin preparing for bankruptcy, you should schedule a consultation visit with The Michelson Law Office. Our office can help you learn more about your options and help you decide which branch to use for the most relief.
If you compare Chapter 7 bankruptcy to Chapter 13, you might think that Chapter 7 offers the most advantages. While this is sometimes true, Chapter 13 is sometimes the better choice. Here are some of the situations in which people benefit more from using Chapter 13 rather than Chapter 7.
When a person falls behind on his or her mortgage and wants to keep this home, the person will need to act quickly to prevent foreclosure from occurring. In this case, a person could attempt to achieve a mortgage medication. However, this is a complicated and long process that offers no guarantees.
The only other option a person has, unless he or she can pay all the arrears, is filing for Chapter 13. When this person files for Chapter 13, several things will happen:
1. The court will issue an automatic stay, which stops the lender from pursuing the debt in any way at all, and this stops harassment from all creditors.
2. The court will give this person up to five years to catch up on the payments of the loan.
3. The court will create a unique repayment plan the person can afford to ensure that he or she catches up on the loan.
Chapter 13, therefore, stops foreclosures, and it is often the only option a person has when he or she wants to save a home. Chapter 7 might be more appropriate if a home is not on the line.
The second situation where Chapter 13 is more advantageous than Chapter 7 is when a person's debts cannot be discharged through Chapter 7. The main reason people use Chapter 7 is for the debt forgiveness it offers. If most of a person's debts do not qualify for a discharge, that person wouldn’t get many benefits from Chapter 7.
This person might get advantages from Chapter 13, however, because this branch offers a way for the person to repay the debts without being harassed by creditors. This branch offers a unique repayment plan, which is based on the person's income and debts. The plan lasts for three to five years.
During this time, the person makes payments on a weekly, bi-weekly, or monthly basis. At the end of the plan, the person will not only owe less money on the debts, but he or she will also be caught up on every debt, leaving the person with a fresh start.
Disqualification From Chapter 7
The other situation to consider is one when a person does not qualify for Chapter 7. The main factor used to determine if a person qualifies is the person's income. If this person makes too much money, he or she cannot use this branch of bankruptcy.
The person will likely qualify for Chapter 13, though. While not qualifying for Chapter 7 is not the only reason a person should use Chapter 13, qualification is often one of the factors that play a role in this decision.
Before you choose either branch, you will need to find out what options you have. This will include finding out which branches you qualify for and which would provide you with the most relief from your financial situation. To do this, you’ll need to talk to bankruptcy experts about your particular situation and what you can do to improve your finances.
If you are in bad financial shape and cannot find a way out, bankruptcy might offer the relief you need. To find out more about bankruptcy, contact The Michelson Law Office. We can help you learn more about your options and which one would benefit your situation the most.
After declaring bankruptcy, many people simply want to move on with their life. Sometimes the moving-on process involves making big changes like buying a house. For someone who has declared bankruptcy, buying a house can be a little more complicated than someone without a bankruptcy in their credit history.
Fortunately, a bankruptcy does not automatically disqualify someone from ever borrowing a mortgage. Knowing the circumstances under which you can qualify for a mortgage can help you decide whether or not now is the right time to start shopping for a home.
Will Bankruptcy Prevent You From Qualifying for a Mortgage?
Yes, even if you have a bankruptcy in your credit history, you can still qualify for a mortgage after passing the mandatory waiting period.
Different types of loans have different waiting periods.
Every home loan has its own specific approval qualifications in addition to this seasoning period, so you can talk to your lender to find out which type of loan is right for you.
If You Want to Buy a Home, What Should You Do?
If you've declared bankruptcy sometime in your past and now want to buy a home, talk to a mortgage lender. Your mortgage lender will need to determine which home loan is best for you and will then need to find out whether or not you've completed the waiting period.
If you haven't completed the seasoning period yet, you'll have a bit of a wait ahead of you. During that time, do what you can to rebuild your credit. A bankruptcy can have a negative impact on your credit, so going through the rebuilding process is important.
What Can You Do to Improve Your Credit Score?
You can do many things to improve your credit score after a bankruptcy. You can start by getting a secured credit card. A secured credit card is a credit card that you secure through a deposit that is equal to, or nearly equal to, the credit limit on the card. The credit card company can seize the deposit in the event that you fail to make the payments due on the card.
Your activity on the card is reported to credit agencies, so using the card on a monthly basis and paying your card on time will help boost your credit score. Just do what you can to avoid incurring debt on your card.
It's also important to pay any monthly payments for debts that survived your bankruptcy. When you stay on top of payments due to creditors, you help yourself look like a better candidate to mortgage lenders.
Once you have gotten through the waiting period, if you've been rebuilding your credit, you may be able to start loan shopping. With a troubled credit history, you may need to contact a variety of lenders before you find the right lender for you. Be patient and don’t give up!
Where Can You Find Out More Information About Declaring Bankruptcy?
If you have more questions about declaring bankruptcy and need more information about life after bankruptcy, contact The Michelson Law Office. We're happy to answer any questions you might have about bankruptcy and how your life will be impacted by filing for bankruptcy.
Filing for bankruptcy is a serious move. Most people do not decide to file for bankruptcy lightly. In fact, many people consider their options for months before filing.
Most people have two options for bankruptcy: Chapter 7 and Chapter 13. Which option you choose is more important than you might think. After all, the way you choose to file for bankruptcy influences the way you will either pay back debtors or give back your assets.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy is designed to wipe out unsecured debts, including medical bills and credit cards. You can think of this method as a type of liquidation. Many people who have lost their jobs or who are facing foreclosure seek this route.
Individuals who qualify for this form of bankruptcy typically have very little disposable income. They may not be employed or may have very little money, to the point where they cannot pay their bills.
If you file for Chapter 7, you will have a trustee who oversees your case. The trustee will sell any non-exempt property in an effort to pay back as much as possible to creditors. Your bankruptcy will then be discharged within about five months.
One of the biggest benefits of this type of bankruptcy is the fact that it allows debtors to discharge most debts quickly. The process also allows for a fresh start. At the same time, you may be able to keep your home and car if you are up to date on payments.
The biggest drawback to Chapter 7 bankruptcy is the fact that it has strict requirements. For example, individuals may not be eligible for this type of program if they make more than the median income for same-size households in the state.
Chapter 13 Bankruptcy
Individuals who have the ability to pay back some portion of debts through a payment plan will benefit most from Chapter 13 bankruptcy. This type of bankruptcy is available for individuals, including sole proprietors.
In most cases, those who file for Chapter 13 bankruptcy have the opportunity to keep their property. This is completely dependent on the creditor and payment plan.
Your bankruptcy will be discharged when you complete your payment plan, which may take up to five years. This is one major disadvantage of filing for this type of bankruptcy.
In many cases, people choose to file for Chapter 13 bankruptcy because they are not eligible for Chapter 7. Of course, in many cases, filing is actually advantageous. For instance, you might be behind on your mortgage, or perhaps you have debts you are not able to discharge. If you simply need more time to repay debts, Chapter 13 bankruptcy works for you too.
Chapter 13 is also a good idea if you want to keep property that you would have to liquidate as part of Chapter 7 bankruptcy. You might also have a co-debtor on some of your records, in which case filing for Chapter 7 bankruptcy would also influence him or her. In this situation, filing for Chapter 13 might be the better option.
Filing for Bankruptcy
The bottom line is that Chapter 7 bankruptcy is ideal for individuals who own little property but are unable to keep up with personal loans, medical bills, or credit cards. Additionally, bankruptcy does not relieve you from duties to pay alimony, student loans, or child support.
Keep in mind that bankruptcy comes with consequences. You will lose your credit cards and will not be able to get a mortgage in the near future. At the same time, it may help you move forward with a brighter financial future.
The Michelson Law Office - Bankruptcy Only specializes in bankruptcy and related legal issues. Bankruptcy is a complicated issue that requires intensive study. Call today to set up a consultation.
Bankruptcy is a major life step and, just as with any other change in life, it requires careful consideration. Many people understand that bankruptcy is all about debt relief but have far less information when it comes to the specifics of this process. Here are some of the key areas you want to do your research in before beginning this process.
Debt is somewhat of a generic term, but bankruptcy laws require debts be clearly defined, and you want to have a precise idea what type of debts you hold to determine if bankruptcy is an option you can consider. In bankruptcy, debts typically fall within one of two categories — secured or unsecured debts — and have a priority rating.
Secured debts are those attached to a property, such as a car loan, and unsecured debts are the opposite, such as personal bank loans. Secured and unsecured debts are typically dischargeable in bankruptcy.
However, debts with a priority rating typically aren't dischargeable, and they receive priority status when a repayment plan is established. Taxes and child support often receive this label. If the debts you're looking to discharge fall into this category, bankruptcy may not be for you.
The Means Test
Once you decide to file for bankruptcy, you're required to complete a means test. Bankruptcy protection is a process meant to safeguard those individuals who truly have debt that they can no longer manage, not for those individuals looking to get out of paying back money they owe. The means test will determine where you fall on this scale.
The state of Wisconsin has created a means schedule that is based on your income and the number of people that live in the home. The more people in the house, the more income an individual can earn and still qualify.
For example, a person who lives in a two-person home will have an annual income cap of $29,870, but a person in a six-person house caps off at $49,943. An income exceeding these income levels does not mean you can't file for bankruptcy, but it does determine what form of bankruptcy you can file.
When debt is overwhelming, many people file for bankruptcy with the goal of eliminating their debt. Protection in this form is known as a Chapter 7 filing. Chapter 7 is a more favorable option for filing because it is a straightforward process that allows many people to eliminate all, or a large portion, of their unsecured debts without any repayment requirement.
However, to further complicate matters, an individual must be able to pass guidelines pertaining to their disposable income, as well. Consider two separate six-person households, where the people that plan to file for bankruptcy earn $45,000 annually.
In Home A, rent, food, and other obligations leave the person with very little money left over each month. However, the person in Home B has very few living expenses and has a fair amount of money left over each month.
Depending on the additional factors surrounding their debt, the person in Home B might meet the median income level but fail the disposable income test. A person that falls into this category might be required to file for Chapter 13 protection, where they will pay back a portion of their debt.
You deserve to live a life where you aren't drowning in debt; use this information to work towards the goal of resolving your financial difficulties so that you can move forward in your life.
Whether you have questions about whether bankruptcy is right for you, or you know you're ready to file, at The Michelson Law office, we are happy to sit down with you and discuss your situation. Contact our office today.