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Archive for the ‘Chapter 13 bankruptcy’ tag

The Truth about Qualifying to File a Chapter 7 Case

August 7th, 2015 at 7:00 am

The reality is that most people who want to file a “straight bankruptcy” Chapter 7 case can do so; if not, Chapter 13 may be better anyway.

 

Here’s the sentence we’re exploring today:

Although there’s some understandable confusion about this, if a Chapter 7 bankruptcy would genuinely be a good solution for you then you’d likely qualify based on your income alone, or by passing the “means test”; otherwise Chapter 13 may either be a good backup or the better solution anyway.

Understandable Confusion

Determining whether you qualify to file a Chapter 7 case is usually less complicated than it seems. But it’s perfectly understandable if it seems complicated. That’s because 10 years ago a major new bankruptcy law went into effect—the so-called Bankruptcy Abuse Prevention and Consumer Protection Act (“BAPCPA”)—which is still sowing seeds of confusion.

One of the main purposes of BAPCPA was to discourage people from filing Chapter 7 bankruptcies. It did so directly by creating some extra hurdles, with the most important one being the “means test.” But news about the new law also discouraged bankruptcy filing indirectly by spreading the word that filing bankruptcy was harder than before, and that impression continues to some degree still a decade later.

Part of the reason that this impression persists is that BAPCPA dumped an astoundingly difficult to understand set of changes onto the Bankruptcy Code. Some parts seem to directly contradict other parts. So bankruptcy judges and courts of appeal all the way up to the U.S. Supreme Court have been trying to understand the badly drafted law. If it’s difficult for judges to make sense of BAPCPA, it’s only natural for ordinary people to get misimpressions about it. It’s easy to see how a concern about qualifying to file a Chapter 7 case under this now not-so-new law still gets blown out of proportion of the reality.

If You’re Like Most People, Your Income Will Enable You to Skip the “Means Test

The “means test” is the main mechanism for qualifying to file a Chapter 7 case. It’s a multi-part formula for determining—based on your income, expenses, and debts—whether you should be in a Chapter 7 or Chapter 13 “adjustment of debts” case. Some of those parts of the test are mind-numbingly confusing.

But the good news is, first, that most people who need a Chapter 7 case can qualify for it. And second, they do so by having low enough income to be able to skip the complicated expense and debts parts of the “means test.”

There are still some odd aspects (such as how your income is calculated for the “means test), but basically if your income is no more than the published median income amount for your state and family size, then you qualify for Chapter 7 without needing to go through any more of the  “means test.”

Also, certain kinds of folks can skip the “means test” no matter the amount of their income, specifically present or recent business owners who have more business debt than consumer debt, and certain military personnel.

Even if You Must Pass the “Means Test,” That Can Be Easy

Even if you are a consumer debtor whose income is higher than the applicable median income amount, because of the way income is calculated (fixating on your last 6 full calendar months of money received from just about all sources), each month your income can change. So through some perfectly legitimate timing strategies you may be able to lower your income to bring it under the applicable median amount.

And even if that’s not possible, you can often pass the “means test” by subtracting appropriate expenses from your income to show you have either no “disposable income” or not enough to disqualify you from Chapter 7.

In any event, getting past the “means test” is often not difficult.

Chapter 13 is Not a Bad Alternative, and Sometimes the Best One

If a person does not qualify under Chapter 7 because of too much “disposable income,” filing a Chapter 13 case instead usually results in the person paying only a small portion of her or her debts, making it not such a bad deal.

Also, Chapter 13 comes with many advantages not available under Chapter 7. For example, through “cramdown” of a vehicle loan, you may be able to reduce monthly payments and the total debt to be paid on it. So even if advantages such as this may not have been important enough to justify filing Chapter 13 voluntarily, if you’re effectively forced into Chapter 13 because of the “means test,” one or two of those advantages could mitigate the pain of being in a Chapter 13 case.

Also, sometime people are dead-set on filing a Chapter 7 case and either don’t look closely enough at Chapter 13 or are just not open to it as an option. But once they are forced to do so because of not passing the means test , they might come to realize that Chapter 13 may have been the better choice anyway. It’s not unusual for a person who just wants to file Chapter 7 case to get it over with comes to realize that Chapter 13 comes with surprising advantages. He or she may come to recognize that it was the best option and should be pursued, even if that person could pass the “means test” and qualify for a Chapter 7 case.

Pay off Debt and Boost Your Credit with the “One-Two Payment Plan”

July 31st, 2015 at 10:56 am

Texas bankruptcy attorney, debt relief, Texas chapter 7 lawyer,Despite the ominous headlines about the national debt, the percentage of American households that have debt has actually decreased in the last decade, according to the National Census. Still, millions of Americans file for bankruptcy each year due to medical bills, lost employment, and other factors.

If you are facing insurmountable debt, then bankruptcy may be a viable option. There are also alternatives to bankruptcy that can help you manage payments and inch toward financial security. This article will discuss one such method, known as the “one-two payment plan.”

Break Down and Prioritize Your Debt

You might be familiar with the phrase “prioritize your debt,” but this can be a somewhat nebulous piece of advice without a thorough understanding of your current financial state. By carefully examining all of your debts and taking note of balances, interest rates, and payment histories, you will be able to identify which debts to pay first. These are usually the ones with the highest interest rates.

Create a Budget for Paying Debt

After identifying which debts to address first, it is time to create a monthly budget for payments. Often, people mistakenly adjust this budget after paying off their highest priority debt. However, it is critical that you maintain this budget until you have paid off all creditors. This not only will help you pay debts faster, but it will also improve your credit score with a steady history of consistent payments.

When in Doubt, Seek Professional Advice

Although the one-two payment plan can make a significant difference in your financial life, debt can be a difficult hurdle to overcome. In many cases, filing for bankruptcy is an intelligent decision that offers debtors a faster path toward financial stability.

If you would like to learn if you are a good candidate for bankruptcy, contact the Law Offices of Chance M. McGhee for a free initial consultation. As an experienced San Antonio bankruptcy attorney, Mr. McGhee can evaluate your financial situation and provide valuable guidance. To schedule a consultation, call our office today at 210-342-3400.

Questions to Ask Yourself before Filing for Bankruptcy

July 24th, 2015 at 10:37 am

Texas chapter 7 lawyer, Texas bankruptcy attorney, Texas chapter 13 attorney,Americans make financial decisions every day of their lives, such as where to purchase food and how to save money on basic living expenses. However, few choices have implications that can match the seriousness of filing for bankruptcy.

Choosing to file for bankruptcy is a critical decision, but for millions of debtors, it is the first step toward financial stability. Although an attorney is the best source for guidance in this matter, here are three questions that can help you decide if bankruptcy is a smart option:

What Is My Current Financial Situation?

Your financial situation, which involves your asset value and income, can affect your eligibility for bankruptcy. If your income is too low, then you may not qualify for chapter 13 bankruptcy. If you file for chapter 7, then there is a chance that you would have to sell assets to pay creditors. These are important considerations before you decide to file.

Will Bankruptcy Actually Solve My Problems?

This is another question that may be difficult to answer without the help of an attorney. Each case is unique, so there may be bankruptcy alternatives that could apply to your situation.

Depending on the chapter you file, bankruptcy can resolve a long list of financial issues. First, it can stop harassment from collection agencies, according to Uscourts.gov. If you file for chapter 13, then you will have a structured repayment plan that can help you organize and manage your debt and finances. No matter which chapter you file, bankruptcy can ultimately lead to a life that is free from the stress that comes with insurmountable debt.

What Are My Long-Term Financial Goals?

Filing for bankruptcy does have certain consequences. It may be difficult to acquire a loan for a home, car, or another investment. You also may not have access to credit. As a result, bankruptcy may limit your financial goals. Before filing, it is important to evaluate these goals and determine how bankruptcy will affect them.

If you would like to learn if bankruptcy is a smart option in your situation, contact the Law Offices of Chance M. McGhee at 210-342-3400 to schedule a free consultation with an experienced San Antonio bankruptcy attorney.

Strategies to Avoid Credit Card Debt

July 17th, 2015 at 10:13 am

Texas bankruptcy attorney, Texas chapter 7 lawyer, Texas chapter 13 attorney,Credit can be a helpful tool when a person faces unexpected financial hardship, but it is also a major contributor to many Americans’ debts. The convenience of credit and bonus offers from credit card companies motivate many consumers to spend out of their budget.

By understanding how to manage credit cards responsibly, it is possible to avoid the stress and uncertainty that come with insurmountable debt. Read on to learn three strategies to avoid credit card debt.

Keep Diligent Records of What You Spend

Online shopping has made it particularly easy to overindulge with credit cards. People can spend thousands with the click of a few buttons.

According to the Federal Trade Commission, one of the best ways to avoid serious debt from online spending with credit is to keep a record of purchases. This will help you understand how much credit spending is affecting your finances.

Do Not Spend More than Half of Your Credit Card Limit

As a general rule, you should never spend more than half of your credit limit. This will ensure that you have credit available in a financial emergency. It can also prevent compulsive spending.

When Dealing with Debt Collection Efforts, Always Keep a Record

Collection agencies love to harass debtors who have outstanding balances. They often call debtors several times each day to request payments.

Even if you are in collections, it is important to understand that you still have rights. There are laws that limit the strategies collection agencies can use to recover payments. Be sure to keeping a record of your communications with debt collectors to protect your rights.

If outstanding credit card debt has become too much for you to handle, call an experienced San Antonio bankruptcy attorney. At the Law Offices of Chance M. McGhee, we can evaluate your situation and create a debt-relief plan. This may involve chapter 7 or 13 bankruptcy, or a bankruptcy alternative. To get started, call our office today at 210-342-3400 for a free initial consultation.

Chapter 7 Bankruptcy: A Brief Overview of Eligibility and Asset Liquidation

June 19th, 2015 at 7:11 am

Texas chapter 7 attorney, Texas chapter 13 lawyer, Texas bankruptcy attorney,There is a multitude of relief options for Americans who are struggling with debt, and in some situations, filing for bankruptcy is a smart decision. Many debtors find that either chapter 13 or chapter 7 bankruptcy can put them on the path toward financial stability. Before filing for chapter 7 bankruptcy, though, it is important to understand if you are eligible and what may happen to your assets.

The best source of information about your unique bankruptcy case is an experienced attorney. A bankruptcy lawyer can evaluate your debts to determine which bankruptcy chapter – if any – is ideal for your particular situation. In the meantime, here is some important information about state median incomes and asset liquidation as they relate to filing for bankruptcy:

State Medians and Your Income

According to UScourts.gov, one of the factors that determine if a person qualifies for chapter 7 bankruptcy is his or her income. If your income is too high, a judge may request that you file for chapter 13 instead, because you will have the means to work with a structured payment plan. Of course, whether or not your income is high or low is relative to the state median.

Selling off Your Assets

Paying off debt through a liquidation of property is one of the distinguishing characteristics of chapter 7 bankruptcy — and it is perhaps one of the more worrying aspects. Many applicants are concerned about whether they will lose their homes, cars, and other property.

In some cases, it may be necessary to sell a home or vehicle in accordance with the chapter 7 bankruptcy process, but some property may be exempt from debtor collections. There is an intricate process involved in determining what assets qualify as exempt. A bankruptcy lawyer can help you understand what property may be safe from liquidation.

If you wish to speak with an experienced San Antonio bankruptcy attorney, contact the Law Offices of Chance M. McGhee at 210-342-3400 to schedule a free consultation. With more than 20 years of experience in bankruptcy law, Mr. McGhee help you decide if filing for bankruptcy is a smart option.

Bankruptcy Filing Questions

June 12th, 2015 at 9:03 pm

Texas bankruptcy lawyer, San Antonio chapter 7 lawyer, Texas chapter 7 attorney,Making the decision to file for chapter 7 bankruptcy is not easy. The thought of selling a home and other assets to pay debt is stressful to say the least. However, chapter 7 bankruptcy is often a smart option for those who want to achieve financial independence and stop creditor actions.

Before filing any chapter of bankruptcy, it is important to learn about the process and qualification guidelines. There are certain questions you must ask, and an attorney can guide you through the proceedings, address your concerns, and ensure you do not make mistakes that compromise your interests.

If you are considering bankruptcy, be sure to ask your bankruptcy lawyer these two questions:

How Will My Income Affect My Bankruptcy Options?

An applicant’s income is one factor that determines whether chapter 7 or 13 bankruptcy is the best course. If your income is greater than the state median, according to UScourts.gov, a request for chapter 7 may automatically convert to chapter 13 because the applicant will have the means to work with a structured payment plan.

How Much Debt Do I Owe?

One of the first steps in filing for bankruptcy is to calculate the total debt owed. This total may influence your eligibility for certain bankruptcy chapters, and there may be alternatives to bankruptcy based on the amount you owe.

Even relatively high amounts of debt may be manageable without bankruptcy — provided you are making concerted, proactive financial decisions. However, if you are finding that your living expenses are conflicting with your ability to make payments, then bankruptcy might indeed be the answer.

Different chapters do have maximum debt limits. For example, the maximum amount of unsecured debt allowed for chapter 13 bankruptcy filers is just greater than $380,000. The limit for secured debt is around $1,149,000. If your total debt is near these numbers, you should discuss your options with a lawyer.

If you would like to speak with a San Antonio bankruptcy attorney, contact the Law Offices of Chance M. McGhee. Schedule a free initial consultation by calling 210-342-3400.

FAQs about Chapter 7 Bankruptcy

June 5th, 2015 at 8:12 am

Texas bankruptcy attorney, Texas chapter 7 lawyer, Texas chapter 13 attorney,Although much of the United States seems to have recovered from the Global Financial Crisis, thousands of Americans still declare bankruptcy every year. Although many are familiar with the general implications of bankruptcy, few first-time filers understand the intricate laws and how they relate to their particular case.

To shed some light on this complex legal field, here are four common chapter 7 bankruptcy FAQs:

What Makes Chapter 7 Unique?

Unlike chapter 13 bankruptcy, which restructures debt into a manageable payment plan, chapter 7 involves the liquidation of assets to pay off creditors. Depending on the types and amount of debt, chapter 7 bankruptcy may allow the filer to pay off his or her debts completely.

Is Chapter 7 Right for Me?

Before deciding to file for chapter 7 bankruptcy, you should find out if you qualify in the first place. Chapter 7 is available to any legal entity, individual or otherwise, according to Uscourts.gov.

In order to be eligible, you must attend credit counseling within 180 days before applying for chapter 7 bankruptcy. When filing, you must have enough income to pay your debts. There are other factors involving your legal and bankruptcy histories that may influence your eligibility. A bankruptcy attorney can assess your case to help you decide if filing for chapter 7 is the right decision.

What Information Will the Courts Require?

Like other forms of bankruptcy, chapter 7 requires an individual to file a petition. An attorney can help with the necessary paperwork. You will need to list all creditors, debts owed, and assets. You will also need to provide a comprehensive record of your income and living expenses.

Will I Lose My Home?

Chapter 7 involves the liquidation of assets to pay debts. You may have to sell your home or other properties during this process. However, this is not always necessary, and a lawyer can help you develop a bankruptcy plan that represents your best interests.

If you would like to speak with an experienced San Antonio bankruptcy attorney, call the Law Offices of Chance M. McGhee at 210-342-3400 for a free consultation.

Credit Card Debt: Can I Keep My Credit Cards When Filing for Bankruptcy?

May 29th, 2015 at 6:26 am

Texas bankruptcy attorney, Texas Chapter 7 lawyer, Texas Chapter 13 lawyer,Most debtors face similar personal and emotional conflicts. The uncertainty that comes with insurmountable debt can cause immense stress, and many Americans feel overwhelmed with the complexities of financial recovery. Although many debtors share these concerns, each case is unique.

There are many causes of debt—from medical bills to a sudden loss of employment. One of the most common sources is credit card debt. With high interest rates and the convenience of credit, these cards land many Americans in financial turmoil. This article will shed some light on credit card debt and address some of the associated concerns.

Three Factors Determine If Your Credit Card Accounts Will Close Due to Bankruptcy

All bankruptcy filers must provide a complete record of their debts. This includes credit card debt.

At some point during the bankruptcy process, your creditors will receive a notification of your declaration of bankruptcy. Credit card companies can choose to cancel your cards after receiving this information. In most cases, creditors will consider three main factors when making the decision to close an account or to leave it open:

  1.       The total debt owed;
  2.       The type of bankruptcy filed;
  3.       And the account holder’s credit score.

Although you must report all debts, you do not have to report credit card accounts with a zero balance. However, the trustee may require you to relinquish your credit cards.

Bankruptcy Appears on Your Credit History

Even if a creditor does not receive a notification of your bankruptcy, the information will still appear on your credit report. As a result, all of your credit card providers have access to this information. Upon review of your credit report, the creditor may choose to cancel the account.

Consult a Bankruptcy Attorney for Helpful Insight

Because each bankruptcy case is unique, an assessment from an experienced San Antonio bankruptcy attorney may prove invaluable. An attorney can provide useful insight and help you avoid making mistakes during the bankruptcy process. If you would like to speak with a bankruptcy lawyer, contact the Law Offices of Chance M. McGhee at 210-342-3400.

Are There Alternatives to Bankruptcy?

May 15th, 2015 at 9:04 pm

Texas chapter 7 lawyer, Texas chapter 13 attorney, Texas bankruptcy attorney,If you are considering bankruptcy, then you probably have several questions and concerns related to the bankruptcy process. There is no doubt about it: Filing for bankruptcy is a serious decision that can affect your personal and financial opportunities.

Here are the answers to three common questions about bankruptcy:

What Are the Alternatives to Filing for Bankruptcy?

In many cases, filing for bankruptcy is a smart decision that puts debtors on the path toward a debt-free life. However, it may not be the only option. Sometimes, aggressive budgeting and smart financial planning are enough to pay off debts.

Each case is unique, and there is no one-size-fits-all solution to repaying debt. Before you decide to file for bankruptcy, you should discuss the options with an attorney. Credit counseling services may also be helpful.

Will Bankruptcy Destroy My Credit?

According to the Federal Trade Commission, bankruptcy will stay on your credit report for as long as 10 years. Though this may seem like an eternity, many people do see their credit score steadily improve after filing for bankruptcy. Bankruptcy may impact your credit score, but refusing to address your debt is an even worse decision.

Will I Lose My Home during Bankruptcy?

Depending on the chapter they file, some debtors face foreclosure. Filing for chapter 13 bankruptcy is one way to maintain your home.

Chapter 13 bankruptcy involves the creation of a repayment plan, so it allows debtors to keep both their dischargeable and non-dischargeable assets. However, chapter 7 involves the liquidation of assets, and filing this chapter could lead to foreclosure.

Choosing which chapter to file is one of the most important steps in the bankruptcy process. Your income and several factors will affect this decision. An experienced bankruptcy attorney can recommend a bankruptcy chapter that would be ideal for your particular case.

If you would like to speak with a San Antonio bankruptcy attorney, contact the Law Offices of Chance M. McGhee at 210-342-3400 for a free consultation.

Bankruptcy Qualifications: Can You File for Bankruptcy Twice?

May 8th, 2015 at 8:17 pm

Texas chapter 7 lawyer, Texas chapter 13 attorney, Texas bankruptcy lawyer,Provided that you qualify for bankruptcy, it is likely that you will only apply once in your life. If everything pans out well, the process should set you on a more financially healthy course. However, whether due to a serious injury, loss of income, or another financial hardship, some people may find themselves considering bankruptcy a second time.

Is There a Limit to the Number of Times You Can File for Bankruptcy?

For the most part, you may file for bankruptcy as many times as you wish — although this does not imply that you should. Applying for bankruptcy too soon after the first may void your ability to discharge your debts, according to the Federal Trade Commission. This is critical because, in many cases, the purpose of bankruptcy is to discharge debt to make your finances more manageable.

The amount of time you should wait before filing a second time largely depends on whether you are filing for chapter 7 or chapter 13. After applying for chapter 7 bankruptcy, you must wait eight years until applying for the same chapter again. This differs from chapter 13, for which the wait period is only two years.

The time period between your first bankruptcy and hypothetical second begins on the day you filed the first bankruptcy. You should only consider a second bankruptcy after researching other options and consulting a bankruptcy attorney.

Filing under a Different Chapter the Second Time

Regardless of your first bankruptcy, you are not obligated to file under the same chapter during subsequent filings. However, changing the type of bankruptcy you file may affect the wait period. If you file for chapter 7 first, you must wait four years to file for chapter 13. For the converse, the waiting period is six years, provided that you have not paid off all unsecured debt. It is also possible to apply sooner if you have made regular payments for more than half of the debt owed, and you can show that a chapter 7 discharge is necessary to gain control of your finances.

To speak with a San Antonio bankruptcy attorney about filing for bankruptcy, either the first time or the second, contact the Law Offices of Chance M. McGhee for a free consultation at 210-342-3400.

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