Can I File Bankruptcy?
If the question is “Can I file bankruptcy?” the answer is always the same…. “It depends!”
Whether you can file a successful bankruptcy depends on a few factors. If you’re a consumer considering filing bankruptcy, this article will help you decide if you can file bankruptcy. Generally, the choices are between Chapter 7 and Chapter 13. Chapter 7 is a faster process and offers a complete discharge of most debt. Chapter 13 is an option for those of us who have more income or assets than are allowed in a Chapter 7, or for those of us who are behind on a car or mortgage and wish to use Chapter 13 to ‘catch up’ on those loan payments.
Sometimes the more appropriate question is “When can I file bankruptcy?” The reason for that is The Means Test. In order to qualify for Chapter 7, you need to pass The Means Test. For the most part, The Means Test takes a look at the 6 months of income prior to filing. As a result, some individuals choose to wait until a few recent months of higher income drop off, in order to qualify. This is especially true if your income fluctuates from month to month, or is seasonal. For instance, if you make more money in the summer than in the winter, you may not qualify for The Means Test in September. The reason would be that The Means Test would consider the 6 months from September backward. However, if you file in April, The Means Test would consider the 6 months from April backward—the months where you did not have much income. So, timing can help answer the question “Can I file bankruptcy?”
If you don’t qualify for a Chapter 7 because you have too much income, or because you have too many assets to protect in a Chapter 7, then you can consider filing a Chapter 13. There are a few articles on our site which discuss Chapter 13. Generally speaking, a Chapter 13 lasts for 36 or 60 months, and requires you to pay a small percentage of your debt over that period. When you make your final payment, the remainder of the debt is discharged, or forgiven. Your Chapter 13 payment will be based in part on your ability to pay. This means the court will ask your attorney to submit a budget showing monthly income and expenses. The budget will reflect something called Net Disposable Income. Your Net Disposable Income will typically be the proposed payment in Chapter 13, representing the amount to go to your creditors.
Most Chapter 13 plans pay back a very small percentage of your unsecured debt. For example, if you have $100,000 in credit card debt, and you have a 5% plan, this means that over the course of 60 months, you would pay back $5,000.00. While there are other considerations, this means that roughly $85 a month from your Chapter 13 payment will be going to your credit card debt. Once you complete your final payment, the remaining $95,000 in credit card debt will be discharged.
Speak With An Attorney Today
If you’d like to determine an answer to the question “Can I file bankruptcy?” speaking with a Charlotte bankruptcy attorney is the next step. The call is free and we’re here to help. You can reach us at 704.749.7747 or click here to request a FREE BANKRUPTCY CONSULTATION. We know you have choices. We hope you choose to Recover With Us.