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Fail the Bankruptcy Means Test and Still File Chapter 7 Bankruptcy?

Some people who fail the Means Test aren’t satisfied with the option of filing for a Chapter 13 . There is still a chance that you can file for a Chapter 7 bankruptcy but you’ll have to prove that you have a special circumstance that requires a review and is an exception to the rule or you’ll have to work around the Means Test.
Review the following with your bankruptcy attorney from Allmand Law to see if any one of these situations apply:

• Timing is very important in a bankruptcy case. If for some reason the Means Test reviewed your finances when you had more income and now you have less (i.e. a job loss), then waiting a few months will give you a lower mean income and you may then pass the Means Test.
• If you don’t have health insurance then getting it before you attempt the pass the Means Test is a good idea. Health insurance for you and your dependents can be deducted, because it is considered a necessity, and can lower your income and boost your expenses.
• How many people live in your house? The Means Test looks at income based on how many people live in the same household, not just immediate family. You may or may not be able to use this to your advantage.
• If you do file a Chapter 13, and your situation changes will you be able to convert it to a Chapter 7 at a later date?

Contact a Bankruptcy Attorney
Set up a free consultation with a bankruptcy attorney to help you receive the most benefit from your bankruptcy so you can have a fresh start.
Do You Have to Pass the Means Test to File Chapter 7?
Bankruptcy involves a very thorough review of your financial situation. An icky but necessary process. Obviously you and your attorney need to examine your broken balance sheet in order to know what needs to be fixed and how to fix it. Part of that process will be determining whether or not you are qualified to file Chapter 7 bankruptcy through a means test.
Simply put, a means test is a standard measure of income and expenses, used to demonstrate a person’s anticipated ability or inability to repay their debt
Working with a qualified attorney, you and your spouse will need to complete Bankruptcy Form 22A “Chapter 7 Statement of Current Monthly Income and Means-Test Calculation”. The form looks similar to a standard tax form, with specific questions pertaining to income. You will be asked to report income from all sources, including salary, wages, interest, rent and unemployment.
If your household income is less than the median family income for a family of your size in your state, then you qualify for Chapter 7. If your income exceeds the median income for your state, then you and your attorney will
need to review your household expenses to further investigate whether or not you are qualified to file Chapter 7.
To calculate your deductions from income, the court follows the Standards of the Internal Revenue Service. The national standards for food, clothing and other items as well as healthcare are combined with local standards
such as housing, utilities, transportation, taxes, payroll deductions, term life insurance, court-ordered payments, some education, childcare, healthcare, telecommunications, etc.
Your income and deductions are multiplied to show a five-year projection. If it appears that your income does not exceed your expenses by about $6500 (for a five year period), then you may file Chapter 7. If your income exceeds your expenses by more than $10,950 (over five years), then you may not file Chapter 7.
As you can see, it is really important that you review the details of the form with a qualified attorney. He or she will be able to help you remember where every penny you earn is spent. Your attorney will help you make sure you are exhausting your options so that you can make an informed decision about filing.
If you do not qualify for Chapter 7, don’t feel discouraged. It may be an indication that reorganizing your debt under Chapter 13 is a better option.
Call for a free bankruptcy consultation today
Do I Make Too Much Money To File Chapter 7 Bankruptcy?

For debtors considering Chapter 7 bankruptcy, determining if their income level makes them eligible for Chapter 7 bankruptcy involves taking a “means test.” Typically, debtors who earn above the median income level for their family size must file Chapter 13 bankruptcy .
Median Income For Texas
The median income for Texas is:

• One person: $38,545
• Two people: $54,908
• Three people: $57,053
• Four people: $66,400

What this means is that if you are a single person or a one person household earning less than $38,545 your income qualifies you for Chapter 7 bankruptcy. Or if you are a two person household, (example: parent/child) you would qualify for Chapter 7 bankruptcy with less than $54,908 in income. If you earned more than the median income, even if it was just by $50 you may need to file Chapter 13 bankruptcy.
 For Special Cases
However, in some cases debtors who earn more than the median income are eligible to file Chapter 7 bankruptcy if they have other large expenses like a mortgage, car payment, medical bills , etc. It is important to go to a skilled bankruptcy attorney who can analyze your situation and make a recommendation on which chapters of bankruptcy your qualify for.
Have a Bankruptcy Related Question? Let us Know
If you would like to set up a free consultation with one of our bankruptcy attorneys feel free to contact us today.
How Do You Know If You Qualify for Chapter 7 Bankruptcy?

Chapter 7 bankruptcy eliminates unsecured debt such as medical bills, credit card debt, and payday loans. In order to understand whether you qualify is by reviewing your eligibility factors. The most effective way to learn if you qualify includes discussing your situation with an experienced bankruptcy attorney.
Meeting qualifications of the means test and providing proof of completion of credit counseling are a couple of factors to review. There are a number of requirements to meet in order to file and obtain a successful discharge
from debt. Yet, many people learn quickly they do qualify and meet such requirements.
Means Test
This reviews the situation of the debtor regarding assets, debt, household size, and monthly income. The test also gives some insight on possible eligible exemptions.
State income requirements
Each state has income guidelines for Chapter 7. Also known as the median income level for the state, if your income is below this amount you may qualify to file.
Complete credit counseling and debtor education courses
Credit counseling is required prior to filing bankruptcy and debtor education should be completed before debt gets discharged. These courses can be completed online or by phone and there are agencies approved by the court to provide each session.
If your income is considered too high you may qualify for a court-approved repayment plan in Chapter 13. When you file your petition proof of completion of credit counseling may be required. If debtor education is not completed before your case is closed, your debt may not be granted a discharge.
Are You A High Income Debtor? You May Qualify For Chapter 7 Bankruptcy

High income debtors who might otherwise not qualify for Chapter 7 bankruptcy may still be able to liquidate their debts if the majority of their debts are non-consumer debts.  In an effort to make sure that entrepreneurs felt free to take risks in business, the bankruptcy code was written in a way that high income individuals with mostly non-consumer debts incurred in the course of business would be able to discharge their debtors in Chapter 7 bankruptcy much like individual debtors with consumer debts. How do you know if your debt is a non-consumer debt?  Let’s take a look at some examples of what non-consumer debts may look like:

• If you’re a high income debtor and have credit card debt incurred to buy equipment and supplies for your business, you may be able to discharge those debts in Chapter 7 bankruptcy. For example: If you purchased computers, printers and desks for your office on a credit card those debts may be discharged in Chapter 7 bankruptcy even if you have a high income.  On the other hand, if you incurred debts on a credit card remodeling your personal residence because you wanted to resell it later at a higher price, that debt may not be dischargeable in Chapter 7 bankruptcy if you are a high income debtor who cannot pass the means test to qualify for a personal Chapter 7 bankruptcy.
• If you took out a personal loan and used that loan to purchase inventory for your business, even if you are a high income debtor you may be able to discharge that debt in Chapter 7 bankruptcy.  On the other hand, if you took out a personal loan to pay your mortgage because you didn’t make any profits from your business for a few months, that debt might not be dischargeable in Chapter 7 bankruptcy if you are a high income debtor who cannot pass the means test to qualify for a personal Chapter 7 bankruptcy.

Remember, debtors who earn over a certain amount of income may not qualify for a personal Chapter 7 bankruptcy; but if the vast majority of their debts are non-consumer debts, then they may be able to still file for Chapter 7 bankruptcy.
Call now to speak to a bankruptcy lawyer!

The post Bankruptcy Means Test appeared first on Allmand Law.

Most people considering filing for bankruptcy will ask: What are bankruptcies? What is the difference between Chapter 7 bankruptcy and Chapter 13 bankruptcy? Which bankruptcy options am I eligible for? Your Vancouver WA bankruptcy attorney will be able to give you legal advice you as to which bankruptcy chapter best suits your needs.
What Is Chapter 7 Bankruptcy?
Chapter 7 is the more traditional type of bankruptcy and is often referred to as a “liquidation” or “straight” bankruptcy. In a Chapter 7 proceeding, the Court appoints a bankruptcy trustee to oversee your bankruptcy case. The trustee has the responsibility of:

• Determining if you have certain assets that are not considered exempt under the bankruptcy law.
• Selling such assets.
• Using the proceeds to distribute among creditors

The ability to exempt assets in bankruptcy cases depends on two things.

• First, how much the assets are worth.
• Second, what state or states have you lived in over the course of the three years prior to the filing of your bankruptcy petition.

During the initial consultation, a bankruptcy law firm will quickly determine whether or not you are likely to have any non-exempt assets. The fact is that well over 95% of Chapter 7 cases are called “no-asset” cases. This means that there are no assets to distribute to creditors.
Meeting of the Creditors in Chapter 7
Roughly 30 days after Chapter 7 bankruptcy filings, debtors have an obligation to attend a brief hearing with the trustee in bankruptcy called the “341(a) hearing,” or “meeting of creditors.” The hearing is usually less than five minutes long and usually not attended by creditors. At the hearing, bankruptcy filers are asked a series of questions under oath to find out if they have any non-exempt assets, or if there are any legal issues with the case. Because most bankruptcy firms anticipate these questions prior to the filing of the case, there are rarely any surprises. Generally, within two months after the conclusion of the meeting, those who filed a petition for bankruptcy receive a notice through the mail of their bankruptcy discharge.
Dischargeable Debts in Bankruptcy
While most types of debt are dischargeable in a bankruptcy, there are several exceptions, the most common of which are:

1. Debts incurred by means of fiduciary misconduct, malicious and willful injury, or embezzlement.
2. Most federal and state income taxes. However, if the taxes are more than three years old, and they meet other criteria, some taxes can be discharged in bankruptcy. Some taxes that cannot be discharged in Chapter 7 can be dealt with in a Chapter 13 bankruptcy.
3. Student loanand other educational debts. The Bankruptcy Code allows for a discharge of student loans upon the showing of “undue hardship.” However, that section is construed so narrowly such that it is extremely difficult to discharge student loans in bankruptcy.
4. Personal injury or death caused to others while driving under the influence of alcohol or drugs.
5. Debts incurred by fraud such as debts incurred without the plan to pay or debts incurred by use of a false financial statement or other written document.
6. Criminal fines, criminal restitution and traffic tickets.
7. Child support and spousal support or alimony.
8. Divorce decree judgments.

With secured debts such as those involving car loan and mortgage payments, you must normally either keep paying on the debt and keep the property (and discharge the entire obligation owed to the secured creditor).
What Is a Chapter 13 Bankruptcy?
Chapter 13 Bankruptcy is debt reorganization or a debt repayment plan. In this type of bankruptcy, a “Chapter 13 Plan” is filed with the Court. Under the Chapter 13 Plan you will pay back some part of what you owe over the course of a three to five year period. You will likely continue to pay your ongoing mortgage and car debts on your own. However, you will avoid having to make a series of payments every month to all your remaining creditors. Instead, you can make one monthly payment to the trustee who, in turn, will distribute available funds to these creditors. Though there are exceptions to this rule, the size of your payment will largely hinge on the amount of your household monthly income and expenses.
If you have disposable income left over after you deduct your monthly living expenses, such as entertainment, gas and electric, car payment, mortgage, etc., from your monthly net income, that amount will be distributed by the trustee to your creditors. Of course, the amount that is left over every month and distributed to your creditors over the course of 36, or even 60 months is rarely going to come close to what you actually owe. Moreover, in Chapter 13, you are no longer responsible for paying off the sort of ridiculous penalties and interest charges that you would otherwise have to pay during the same time span if you were not in a chapter 13 debt reorganization plan.
Why File Chapter 13?
Common reasons for you to file Chapter 13 are:

1. To protect assets that you might lose in a Chapter 7 case because you have too much equity.
2. To pay non-dischargeable debts (most often taxes and child support) through a Chapter 13 Plan as opposed to what the creditor might demand.
3. To prevent foreclosure on a home, or a repossession of a car or other secured property
4. To obtain a discharge of certain debts that are not dischargeable in Chapter 7.
5. To achieve debt consolidation and pay as much as possible over the term of the Chapter 13 Plan without interference from creditors.
6. To “rewrite” auto loans when the value of the vehicle is less than the amount owed.
7. To obtain debt relief when you filed a Chapter 7 case within the past 8 years.
8. To be eligible for bankruptcy if your regular income is in excess of certain limits.

Meeting of Creditors in Chapter 13
A meeting of creditors is held with the Chapter 13 Trustee about 30 days after filing. During that meeting, the Chapter 13 Trustee will ask some pretty simple questions about your situation in order to make sure that the proposed Chapter 13 Plan complies with bankruptcy laws. As with Chapter 7, this hearing usually lasts about five minutes. Usually, none of your creditors attend the hearing.
Approximately one month after the creditor’s meeting, the Bankruptcy Court will hold a hearing to confirm a Chapter 13 Plan. The debtor rarely needs to attend that hearing. The court will confirm the Plan unless the Chapter 13 Trustee or one of the creditors has some objections to it. If they file objections, you can usually resolve them through negotiation with the objecting party so that you can have the Plan confirmed.
Are There Drawbacks to Filing Chapter 13?
While Chapter 13 can be a very powerful tool for the debtor, Chapter 13 relief does come with some drawbacks:

1. A Chapter 13 debtor is prohibited from incurring debt while the case is active without the approval of the Chapter 13 Trustee.
2. Payments may increase if income increases while the case is active. Chapter 13 (In Oregon)
3. Income tax refunds normally must be turned over to the Chapter 13 Trustee during the first three years of the Plan. Earned income credit tax refunds do not have to be turned over to the Trustee.
4. Trustee monitors income by requiring that copies of tax returns be provided each year.
5. Fluctuation in income can make it difficult for a debtor to complete a Chapter 13 case.
6. Once all of the monthly payments are made pursuant to the terms of the Chapter 13 Plan, any remaining debts owing as of that time except child support, criminal fines and restitution, some taxes and student loans are normally discharged.

What Is Bankruptcy? Get Answers from a Vancouver WA Bankruptcy Lawyer Today
Learn more about what is bankruptcy and which chapter is the best option for you. Contact our offices today for a free legal consultation.

The post Bankruptcy Overview appeared first on Vancouver Bankruptcy Attorney | Northwest Debt Relief Law Firm.

From: CNBC.com
By: Megan Leonhardt
https://www.cnbc.com/2019/09/18/student-loans-are-not-the-no-1-source-of-millennial-debt.html

When is it too late to stop foreclosure? In other words, when is the absolute latest you can file bankruptcy and stop a foreclosure sale? The truth is, it’s not over until it’s over. You can file right up to the day of sale.
Understanding the Foreclosure Timeline
In a typical foreclosure situation, your lender will send you a notice of default and you still have an opportunity to repay the delinquent balance and rehabilitate the loan. The lender will set the deadline.
If you cannot or don’t repay the delinquent balance, the lender will proceed with foreclosure. Foreclosure usually begins 90 days after the last payment. After 120 days, the lender must issue you a notice of intent to sell. They will sell the home at a public auction. So long as the deed has not been transferred to someone else, you can stop the foreclosure at any time, including the date of the auction.
Declaring Bankruptcy to Delay the Sale
Once you petition the court for a bankruptcy, all creditor actions against you must immediately stop. This includes foreclosure. There are, however, limitations to this. You must be able to repay the arrearage, costs related to the foreclosure, and make future mortgage payments on your home. Stopping the sale does not mean stopping the foreclosure. It means stalling the sale.
Additionally, the injunction placed on your creditor can be lifted if the creditor can show that you either have no intention of making payments on your home or you don’t have the fiscal ability to repay what you owe. Even if the automatic stay is lifted, this will buy you some extra time.
Should I File Before or After Foreclosure?
For most Americans, bankruptcy is an unattractive option because it smacks of failure. After all, you should be able to repay your debts, right? But sometimes things happen that are outside your ability to control. Your spouse may become ill, or you may experience an unexpected injury. Not only are you losing income, but you also have medical expenses to worry about.
You are usually better off filing bankruptcy before your home is in foreclosure. This is because, in certain situations, your debt can survive bankruptcy. This (especially) includes tax debt accrued on the property.
One other thing to consider: While you’re in bankruptcy, which can take some time to work its way through the courts, your lender cannot collect mortgage payments. This will buy you some time to save money and financially regroup. If you wait until the foreclosure process is already in place, you can delay the sale of your home right up until the date it’s sold, but you will very likely have less time to save money. Your lender will likely petition the court to lift the automatic stay and proceed with the foreclosure process.
It’s important to understand your rights as a borrower. If you are facing wage garnishments, creditor lawsuits, and struggling to pay your mortgage, a skilled bankruptcy attorney can help you make the best decision for your situation.
Chapter 13 Bankruptcy Can Help You Save Your Home
Chapter 13 bankruptcy allows you to reorganize your debt. It is ideal for managing secured debts (like mortgages) that you are struggling to pay. In Chapter 13, you and your attorney are required to submit a repayment plan to the court. To save your home from foreclosure, this repayment plan must include any arrearage, homeowner’s association fees, and property taxes that are in arrears. Additionally, you will need to continue making payments on your mortgage.
One of the major benefits of Chapter 13 is that it can strip away second mortgages and home equity lines of credit (HELOC). These debts, which are secured against your home equity, can be converted into unsecured loans. Unsecured loans are considered the lowest priority in Chapter 13. You may be allowed to repay only some of the debt or the second mortgage may be stripped off completely.
When Is It Too Late to Stop Foreclosure? Ask a Dallas TX Bankruptcy Attorney
So when is it too late to stop foreclosure? Even if your home is in foreclosure, you have options. We can help. If you’re worried about losing your home, talk to us early in the process. We can help you understand your foreclosure defense options and determine your best path moving forward. Contact Allmand Law Firm PLLC today to learn more.
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