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The Benefit of Filing Bankruptcy Quickly if Your Income Has Increased or Is About To

To qualify for Chapter 7 “straight bankruptcy” you must pass the means test. Otherwise you would likely end up in the much more time-consuming and expensive Chapter 13 “adjustment of debts.” Chapter 13 is great if you need its benefits, but not if you are forced into it and would prefer the much simpler fresh financial start of Chapter 7. Taking Advantage of the Odd Means Test Definition of “Income” The key to the means test for our purposes here is the odd and very precise way it defines … [Read more...]

Dealing with a Recent One-Time Income Event for the “Means Test”

The Chapter 7 Means Test This test was designed to screen people away from Chapter 7 “straight bankruptcy” and towards Chapter 13 “adjustment of debts.” Those who could afford to pay a meaningful amount to their creditors are legally required through the means test do so under Chapter 13 instead of being allowed to discharge (legally write off) their debts under The means test looks at your income first, and then if necessary at your allowed expenses. If your income is less than the … [Read more...]

You May Not Need to Take the “Means Test” if You Are a Business Debtor

The means test is the gateway for qualifying to get a fresh financial start through a Chapter 7 “straight bankruptcy” case. This test is based first on your income. If your income—based on a very distinct way of calculating it—is not low enough, then the means test also looks at your allowed expenses, based on a complicated set of rules looking at national, regional, and local expense standards. Being able to avoid all these income and expense calculations and thus be allowed to file a … [Read more...]

Why Every Day Can Make a Difference in Passing the “Means Test”

The Point of the Means Test This test is intended to determine if you have the “means” to pay a meaningful amount to your creditors over a reasonable time period. You have to pass the means test before you are allowed to go through a Chapter 7 “straight bankruptcy,” which generally lasts less than four months, or instead are forced to do a Chapter 13 “adjustment of debts,” which generally lasts three to five years. Focus First on “Income” At the heart of the means test is a review of your … [Read more...]

What Happens to Retirement Benefits in Bankruptcy

Protecting Your Retirement in Bankruptcy Most forms of retirement are protected when you file under any Chapter of bankruptcy. There are a few exceptions to this, so make sure that whatever kind of retirement you have is protected from your creditors. If in fact all of your retirement funds are protected, that means that if you file a Chapter 7 “straight bankruptcy” case the Chapter 7 trustee will have no right to take any of it to pay your creditors. And if you file a Chapter 13 … [Read more...]

Dealing with an Expected Vehicle Repossession

Bankruptcy stops your vehicle from being repossessed, and then gives you many tools—under both Chapter 7 and Chapter 13--to either keep or surrender the vehicle. Stopping the Repossession The minute you file any kind of bankruptcy case, the “automatic stay” instantaneously stops vehicle repossession. The automatic stay is an injunction against repossession and any other collection efforts by creditors. This federal injunction goes into effect immediately upon the filing, without the delay of … [Read more...]

Dealing with an Unhappy Ex-Spouse Creditor

A Chapter 13 bankruptcy - the 3-to-5-year legal procedure for “adjustment of debts”—can help you in two huge ways with an ex-spouse who is unhappy with you for not paying a debt you owe to him or her: It can discharge (legally write-off forever) non-support “property settlement” obligations owed to your ex-spouse through your divorce decree. It can give you time to catch up on child support, while stopping the aggressive collection tactics otherwise available to your ex-spouse and his or … [Read more...]

Dealing with a Debt Collector’s Threat to Fight Your Intended Discharge of the Debt

The goal of most bankruptcies is the “discharge:—the legal write-off of debts. If you are thinking about filing bankruptcy to get a fresh financial start through a discharge of your debts, and a debt collector tells you that you won’t be able to discharge that debt, is that true? Is it likely a valid threat? Idle Threats? Most of the time that a creditor or collector is telling you that a particular debt would not be discharged, they are wrong. They are likely lying to you to or trying to … [Read more...]

Dealing with a Debt Collector’s Threat to Fight Your Intended Discharge of the Debt

The goal of most bankruptcies is the “discharge:—the legal write-off of debts. If you are thinking about filing bankruptcy to get a fresh financial start through a discharge of your debts, and a debt collector tells you that you won’t be able to discharge that debt, is that true? Is it likely a valid threat? Idle Threats? Most of the time that a creditor or collector is telling you that a particular debt would not be discharged, they are wrong. They are likely lying to you to or trying to … [Read more...]

Good Reasons to File Chapter 13 Even When You Won’t Get a Discharge

A recent blog post discussed how you don’t have to wait the usual period of time to file a second bankruptcy case if that new case does not discharge any of your debts. Usually you would have to wait 4 years between filing a Chapter 7 “straight bankruptcy” and a subsequent Chapter 13 “adjustment of debts” one. But you don’t have to wait out that 4 or any of the usual time periods if you don’t need a discharge of your debts in the new Chapter 13 case. There are reasons to file a new Chapter 13 … [Read more...]

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