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Archive for the ‘Chapter 7 bankruptcy’ tag

What Are the Laws for Filing Multiple Bankruptcies?

October 17th, 2019 at 3:27 pm

TX bankrutpcy lawyer, TX chapter 7 attorney, Texas bankrutpcy lawyer, Most Americans have some sort of debt, with one of the most common forms of debt being credit card debt. Most of the time, debt is manageable if you are able to budget your money, but sometimes life happens and debt can become overwhelming. In cases such as those, bankruptcy is often your best option. Filing for bankruptcy can allow you to manage your debt in affordable payments or even discharge your debt, allowing you to wipe your slate clean.

Unfortunately, sometimes your first bankruptcy is not your last bankruptcy. If you find yourself drowning in unmanageable debt again, you may wonder if it is possible to file for bankruptcy again. Technically, the answer is yes, but there are a few stipulations you should know about.

Filing for Bankruptcy More Than Once

You can file for bankruptcy as many times as you want to file. There are no rules about how many times you can file for bankruptcy, but there are rules as to how often you can receive a discharge of your debs. The time between discharges is based on the type of bankruptcy you filed before, whether or not you received a discharge in that bankruptcy and the type of bankruptcy you are trying to file. The waiting periods between bankruptcy discharges are as follows:

  • Chapter 7 to Chapter 7: You can receive a discharge after eight years.
  • Chapter 7 to Chapter 13: You can receive a discharge after four years.
  • Chapter 13 to Chapter 13: You can receive a discharge after two years.
  • Chapter 13 to Chapter 7: You can receive a discharge after six years.

It is worth it to note that if you previously filed for a Chapter 13 bankruptcy and are currently trying to file for a Chapter 7 bankruptcy, you may be able to obtain a discharge sooner if you paid back your debtors in full or you paid at least 70 percent of your debt back and your new bankruptcy filing is in good faith.

Do You Have Questions About Bankruptcy? A San Antonio, TX Bankruptcy Attorney Can Help

Nobody files for bankruptcy with the intention of filing for bankruptcy more than once in their lifetime, but sometimes life happens and you have no other choice. If you have previously filed for bankruptcy and you think you might want to file again, you should talk with a knowledgeable New Braunfels, TX bankruptcy lawyer. At the Law Offices of Chance M. McGhee, we understand that sometimes the only option for debt relief is a bankruptcy, even if you have filed for bankruptcy before. Let us help you determine if filing for bankruptcy is your best option. Call our office today at 210-342-3400 to schedule a free consultation.



Filing for Bankruptcy Due to Medical Debt

July 12th, 2019 at 6:34 pm

medical-debtMost of the time, a person files for bankruptcy because it is the last option for bills that cannot be paid. After all, a bankruptcy on your record can diminish your credit score and make it difficult to borrow money for items like a house or a car for years. When a person files for bankruptcy, it is because they have exhausted all other options. Unfortunately for many Americans, the thing driving them to file for bankruptcy is medical debt. According to CNBC, 66.5 of all bankruptcies filed in the United States between 2013 and 2016 were tied to medical issues such as high costs for medical care or taking time off of work for medical reasons. If you have found yourself in the precarious situation of too much medical debt, here are a few things you should know before you file for bankruptcy:

Your Medical Debt is Dischargeable in Bankruptcies

Here is the good news — medical debt is dischargeable in both Chapter 7 and Chapter 13 bankruptcies. The type of bankruptcy you file for will entirely depend on your financial situation and which option would make more sense. A Chapter 7 bankruptcy would completely eliminate your medical debt, while a Chapter 13 bankruptcy would reorganize your debt into manageable payments.

There is No Such Thing as a Medical Bankruptcy

Technically, there is no such thing as a “medical bankruptcy”; there is no bankruptcy that can only discharge your medical debts. If you have medical debt and you file for bankruptcy, it is treated as an unsecured debt, which is in the same realm as credit card debt, personal loans and utility bills. Filing for a Chapter 7 bankruptcy would wipe out ALL of your unsecured debts — not just your medical debt.

There May Be Other Ways to Repay Your Debt

Before you make the decision to file for bankruptcy because of medical debt, you should make sure that you have absolutely no other options. Once you realize you are becoming overwhelmed with medical bills, you should immediately contact your hospital or health care provider to see if they offer any type of repayment plans. At the very least, you should inform them that you cannot pay the entire amount, but will pay what you can. If medical bills are preventing you from paying your rent or mortgage, utilities or other important bills, you may want to consider filing for bankruptcy.

Hiring a Boerne, TX Bankruptcy Lawyer Can Make Your Life Easier

If you are overwhelmed with medical debt, filing for bankruptcy may be your best option. At the Law Offices of Chance M. McGhee, we can look at your financial situation and help you determine whether or not filing for bankruptcy to help with your medical debt is in your best interest. Our skilled New Braunfels, TX bankruptcy attorneys have years of experience under their belts and are prepared to guide you throughout the bankruptcy process. Call our office today at 210-342-3400 to schedule a free consultation.





Simple and Not-so-simple Debts in Chapter 7 and 13

November 24th, 2017 at 8:00 am

Very broadly speaking Chapter 7 handles simple debts as well or better than Chapter 13 does, which handles more difficult debts better.

Debts in Bankruptcy

When deciding between Chapter 7 “straight bankruptcy” and Chapter 13 “adjustment of debts” you look at many factors. You have to meet certain qualifications (usually easy to meet) to file either one. The amount of your income, the nature of your assets, whether you own a business, and your immediate and long-term goals—all of these come into play.

But the most important consideration is your debts. Bankruptcy is of course mostly a tool for dealing with your debts. Chapter 7 and Chapter 13 each deal better than the other with certain types and combinations of debts.

Today we get into which of these two consumer bankruptcy options is better for which debt scenarios.

A Helpful Starting Point

Our first sentence gives us a good starting point. Chapter 7 handles simple debts as well or better than Chapter 13 does, which handles more difficult debts better.

So if you have mostly or all simple debts, then Chapter 7 will tend to be better for you. If you have a number of difficult debts, Chapter 13 will more likely be better.

The Different Types of Debts

There are basically three types of debts:

  1. General unsecured—There’s no collateral or “security” tied to these debts (“unsecured”), and they aren’t “priority”—given special treatment in the law. General unsecured debts include most credit cards, medical debts, no-collateral personal loans, utility bills, back rent, and many, many others.
  2. Secured—The debts are legally tied to collateral or with a lien on something of value. Included are home mortgages, vehicle loans, retail debts secured by the goods purchased, personal loans secured against personal possessions, business loans secured by business and/or personal assets—all debts secured by anything you own.
  3. Priority—Simply, debts that the law treats as special for whatever policy reason. The main examples for consumer debtors are recent income and other taxes, and child and spousal support.

These different types of debts are treated differently in Chapter 7 vs. Chapter 13.

Debt Scenarios Handled Well by Chapter 7

If ALL your debts are general unsecured debts, Chapter 7 will more likely be your better option. Most general unsecured debts are discharged—legally written off—in a Chapter 7 case. So you file a Chapter 7 case through your bankruptcy lawyer in usually less than 4 months all your debts are discharged. You have your fresh financial start.

Some secured debts are handled reasonably well in a Chapter 7 case. If you are current on a home mortgage or vehicle loan, you can usually keep your home or vehicle by maintaining your payments and “reaffirming” the debt. If you are very close to being current, you may be able to catch up and “reaffirm” as well. If you are surrendering a home or vehicle (or any other collateral) Chapter 7 often works well for that.

Chapter 7 may be appropriate for dealing with certain limited priority debts. If you owe an income tax debt or are behind on child support, discharging all or most of your other debts may enable you to catch up on the tax or support. But you are subject to collection actions by the tax authorities as soon as your Chapter 7 is over. And as for support debt, a Chapter 7 filing does not stop its collection even while your bankruptcy case is active. So if you owe any tax debt that you can’t comfortably pay through a standard IRS/state payment plan, Chapter 13 may be the better option. And if you are behind on child or spousal support, only Chapter 13 can stop the aggressive collection actions that an ex-spouse or support collection agencies can use against you.

Debt Scenarios Not Handled Well by Chapter 13

If ALL your debts are general unsecured debts, Chapter 13 is usually not your better option (assuming you have a choice). That’s because unlike Chapter 7, in a Chapter 13 case you usually have to pay a portion of your general unsecured debts. You pay as much of those debts as you can afford to do so over a 3 to 5-year period. Then the portion you did not pay gets discharged.

It’s important to understand that the general unsecured debts are often paid relatively little in a Chapter 13 case. It’s common that you’d pay only 5 or 10 cents on the dollar, and almost always no interest or penalties. In many parts of the country you can even pay 0 cents on the dollar. That’s because the debtor owes secured or priority debts which use up all the money he or she can afford to pay.

Debt Scenarios Handled Well by Chapter 13

Chapter 13 deals with secured debts often better than does Chapter 7. That’s especially true if you’re behind on a debt with collateral you really want to keep. Under Chapter 7 you’d usually have to get current on a vehicle almost immediately to be able to keep it. You have many months—or even a year or two—to catch up under Chapter 13. If you’re behind on your home mortgage you get up to 5 years to catch up.

Chapter 13 also gives you some very powerful tools for dealing with secured debts unavailable under Chapter 7. You may be able to “strip” a second or third mortgage off your home’s title. You may be able to do a “cramdown” on your vehicle loan or other personal property debt, potentially greatly reducing your monthly payment and the total you pay.

With priority debts, Chapter 13 gives you tremendous power and flexibility. It stops collection of support arrearage, and gives you months or years to catch up—as long as you keep current on ongoing support. With unpaid income taxes Chapter 13 provides many benefits. It prevents future tax liens. It enables you to deal with prior-recorded tax liens extremely well. Chapter 13 gives you up to 5 years to pay taxes that can’t be discharged. Usually throughout that time you pay no ongoing interest or penalties.


It’s a bit of an oversimplification to say that simple debts lead to Chapter 7 while more complicated ones lead to Chapter 13. But, as we’ve just shown, that’s often the situation.

But just as you are a unique human being, your circumstances are unique. Get the unique assessment of your options that you need from an experienced and empathetic bankruptcy lawyer.


Special Assets–An Inheritance

November 28th, 2016 at 8:00 am

Inheritances and life insurance proceeds have a special rule when it comes to the timing of your bankruptcy filing.


Your Assets in Bankruptcy

Most people who file bankruptcy can keep everything they own that they want to keep. That’s usually because all of their assets are “exempt”—protected from their creditors under bankruptcy.

If all your assets aren’t exempt, they can often be protected through other means. As just one example, Chapter 13 “adjustment of debts” can often shield assets that aren’t exempt. It’s important to know whether you have any assets that aren’t protected so that the right steps can be taken.

Today we look at one special kind of asset that you might not usually think of: an inheritance. An inheritance would usually not be exempt. Plus, there are some special rules about inheritances that are worth knowing, even if you’re not expecting to get one.  

“Pre-Petition” and “Post-Petition” Assets?

We put up a blog post on November 9 about the difference between “pre-petition” and “post-petition” assets. Essentially, everything you own as of the moment your bankruptcy case is filed are considered pre-petition assets. Everything you earn or acquire after that moment are post-petition assets.

This is important especially in Chapter 7 “straight bankruptcy” because normally only pre-petition assets are part of your case. Post-petition asset don’t need to fit into any exemption because they are not part of your case. That’s an important part of your “fresh financial start”—after the point in time when you file, you are generally free to earn and acquire income and assets beyond the reach of your creditors.

But inheritances are an important exception to this.

Possession of Assets

Here’s one last point before getting to the special rule about inheritances. It’s a seemingly simple but very important point. Your pre-petition assets include not just what you are in immediate possession of but also what you have a right to even if not in your possession.

Your pre-petition assets include “all legal or equitable interests of the debtor in property as of the commencement of the case.” (Section 541(a)(1) of the U.S. Bankruptcy Code.) Doesn’t matter where that property or asset is located or whose possession it’s in.

Take the example of a classic car that you and your uncle are restoring in his garage. If it’s your car, if you’re on the title, of course it’s your asset. When you file a Chapter 7 bankruptcy it’s a pre-petition asset regardless where it happens to be located. So if you want to keep the car it needs to be covered by an exemption, or be protected in some other way.

But now let’s say your uncle actually owns that car—he bought it and only he’s on the title. What if his will says that you’ll inherit it from him? He’s still the owner and you’re not. Just because his will says you’ll get it when he dies does not give you any right to it now. He could change his will to give the car to somebody else. You simply have no “legal or equitable interest” in the car now, or when you file your Chapter 7 case. It’s not a pre-petition asset.

An Inheritance as Part of Your Chapter 7 Case

That is, that car is not a pre-petition asset, not part of your Chapter 7 case, if your uncle is alive when you file your bankruptcy case. It’s totally different if you file bankruptcy after he has died. Then whatever you are to receive through his will would be considered yours for bankruptcy purposes.

That’s true regardless if the car is still in your deceased uncle’s garage and/or still titled in his name. Doesn’t matter that his will still has to go through the probate process before the title transfers to you and you can take possession of the car.

By the way, this is also true if you don’t know that your will says he left the car to you. In fact it’s true even if you don’t know that your uncle has died as of the time you file your bankruptcy case. Whatever assets you have rights to by law are yours for bankruptcy purposes regardless of your knowledge about them.

Special 180-Day Inheritance Rule

So a potential inheritance is not considered yours if you file bankruptcy when your uncle is alive.  But bankruptcy law throws a very important curve here. If within 180 DAYS AFTER you file bankruptcy you “acquire or become entitled to acquire” an inheritance—through the death of the person from whom you are inheriting—then the property being inherited is counted as if it was your property at the time you filed. (Section 541(a)(5) of the Bankruptcy Code.)

In other words, if your uncle in our example dies within 180 days after you file bankruptcy, the car would be part of your bankruptcy case. It would have to be protected through an exemption, a Chapter 13 case, or in some other way. Otherwise the Chapter 7 trustee (on behalf of your creditors) could take it from you to sell and pay the proceeds towards your debts.

Includes “Bequests,” “Devises,” “Life Insurance,” and “Death Benefits”

This 180-day-after bankruptcy-filing rule applies not only to property received by inheritance. It also applies to what you acquire “by bequest” and “devise,” plus “as a beneficiary of a life insurance policy or of a death benefit plan.” (Section 541(a)(5)(A) and (C).)

So, these include property you receive through another’s death, whether or not the person had a will. It includes what you receive by “intestate succession”—by the laws which distribute a decedent’s assets when there’s no will.

Awkward but Crucial Timing

This 180-day rule can give you some awkward timing problems.

What if you have a relative who you know is leaving something to you and who is not in good health? What if the amount being left to you is big enough to pay off your debts? You may be hoping to avoid filing bankruptcy by using the expected inheritance to pay off those creditors. If so you’re probably trying to hold off your creditors in the meantime as you’re holding off on filing bankruptcy.  

But of course you have no control over the time of death. And even after that who knows how long after that you would actually receive the money. You also probably don’t know how much you’re getting and whether it’s enough to take care of your creditors.

So simply filing bankruptcy now may make more sense.  It would increase the likelihood that it would be filed more than 180 days before the death. If so, it’s considered a post-petition asset, outside the jurisdiction of your bankruptcy case.

Or what if you are expecting to inherit a relatively small amount, not nearly enough to pay off your debts? You would understandably prefer that it all not go to your creditors. If so, you want to file your case more than 180 days before that person dies. In general you want to file sooner rather than later to increase those odds.


This is clearly a delicate area. It’s especially so if it’s likely that the person will die within the next 180 days. There may be ways of protecting that inheritance or life insurance if it’s received before filing bankruptcy. A Chapter 13 case may be more appropriate than a Chapter 7 one.

But please be aware that asset protection methods and procedures are potentially dangerous, filled with traps for the unwary. That’s especially true of efforts made to shield asset before filing bankruptcy. All of this really should be done only with detailed advice from an experienced bankruptcy lawyer who knows your whole situation.


What Is Your State for the “Means Test”?

March 25th, 2016 at 7:00 am

You must use the right “state in which you live” to qualify for Chapter 7. It’s not always obvious.


Our last blog post a couple days ago was about the unique definition for “income” as used in the “means test.” Understanding this definition and applying it to your advantage can be crucial for passing the “means test” and qualifying for Chapter 7 “straight bankruptcy.” (See that most recent blog post to calculate your own annual “income” amount.)

As we said, the “easiest way to pass the ‘means test’ is for your family ‘income’ to be no greater than the median family income amount for your family size in your state.” And we provided a link to a table of all the median family annual income amounts (effective starting April 1, 2016) for every state and family size.

But as we asked at the end of our last blog post, what if, after going through the steps of calculating your “income,” you’re not sure what state you should pick on the table of median family income amounts? What if you’ve moved recently? What if you have a business operated out of one state but you own a home in another state and live there much of the time? Or what if you’re married but maintain households in two states?

Different State Median Family Income Amounts Can Vary Significantly

If your life straddles two (or more!) states, it can make a big difference which state you use for the “means test.” For example, if you are single without any dependents, the state with the lowest annual “median family income” is Mississippi at $37,590 and the highest is New Jersey at $61,347, more than 63% higher. Or, if you have a family of 4, the lowest is Arkansas at $60,549 and the highest is Massachusetts at $111,595, more than 84% higher.

The Bankruptcy Code Doesn’t Say

For people who have lived and worked in the same state for years, it’s obvious what state they belong to. But if you have either moved recently or have personal or business connections in more than one state, it could be anything but obvious.

Federal bankruptcy law can be quite clear about which state you choose in dealing with other bankruptcy choices.

For example, the state in which you can file bankruptcy is wherever your “domicile, residence, principal place of business… , or principal assets.. .  have been located” for at least 91 days before the filing. (See 28 U.S.C. Section 1408.)

Or you can use a state’s property exemptions to protect your assets usually after 2 years of having your home in that state. (See 11 U.S.C Section 522(b)(3)(A)).

However, when Congress created the “means test” in the U.S. Bankruptcy Code, it only said that you compare your “income” to the “median family income of the applicable State.” The statute (11 U.S.C Section 707(b)) does not say anything about how to determine your “applicable State.”

The Bankruptcy Code’s definition of “median family income” (11 U.S.C. Section 101(39A)) does not address this. The phrase “applicable state” is simply nowhere defined by statute.

The “State in Which You Live”

The official bankruptcy form used to determine your “income” for “means test” purposes is called the “Chapter 7 Statement of Your Current Monthly Income,” Form 122A-1. It then has you compare your “income” to the appropriate median family income amount. This form asks you (at question 13) to “[f]ill in the state in which you live.”

The U.S. Trustee’s Office, part of the U.S. Department of Justice, is the major enforcer of the “means test.” One of its tasks is to see whether the above form is completed appropriately. It has put out a “Statement of [It’s] Position on Legal Issues Arising under the Chapter 7 Means Test.” On the issues we’re dealing with here, this Statement says simply that “[a]pplicable state is [the] state of residence at filing.”

What This Means in Practice

The implication of all this seems to be that you should use the median income amount for your family size for the state where you are living at the time your bankruptcy case is filed. It seems that if you are filing bankruptcy in a particular state because that is where you operate a business or it’s where you are domiciled (your permanent home even if you’re not there now), you wouldn’t use that state’s median family income amounts. Rather you can and must use the median family income amounts for the state where you are currently living.

But the law is vague. The U.S. Trustee’s Office’s Statement is only one opinion, even if it’s from an important source. These kinds of vague matters in the law are often left to local practices. These may be formal—local or regional federal court rulings. Or they may be informal—just the way a particular regional U.S. Trustee’s Office or local bankruptcy judge or judges tend to interpret this vague language in the bankruptcy statutes, the “applicable state.”

This is one of the reasons that you need the advice of an experienced bankruptcy lawyer. He or she has spent years, all day every day, immersed in not just the national bankruptcy statutes and rules, but also in nuts-and-bolts-policies and practices of local judges and other players in the system. Since choosing the right state can make the difference between qualifying for the 3-4-month-long Chapter 7 case instead of being stuck in a 3-to-5-year Chapter 13 one, the advice of a lawyer could be extremely valuable here.


Bankruptcy Timing and the Holidays

December 7th, 2015 at 8:00 am

Filing bankruptcy in December instead of January can make the difference between qualifying for Chapter 7 and being forced into Chapter 13.


If you have a serious debt problem, you may be doing your best during the holiday season to work around it. You feel you need to get through the next few weeks and then you can deal with it early next year.  It’s hard to find the time to get the holiday obligations taken care of much less find the time and attention to focus on what you should do about your debts.

But it may be worthwhile to find that time and attention.

Bankruptcy Timing Laws

Bankruptcy has many timing rules. Some of those rules can give you major advantages if you filed your bankruptcy case even just a few weeks sooner. Or you may be able to get advantages by filing later. But you wouldn’t know if you didn’t get legal advice about it. Getting that advice sooner rather than later can make a huge difference. Here’s one reason why.

Taking Advantage of the Income Timing Laws in the “Means Test”

The means test essentially determines whether you can file a Chapter 7 “straight bankruptcy” or instead must do a Chapter 13 “adjustment of debts.” The biggest practical difference between the two is that a Chapter 7 case is almost always done within 4 months while a Chapter 13 case lasts 3 to 5 years.  

The purpose of the means test is to require those who have the “means” to pay a meaningful amount back to your creditors. If you are considered under the means test to have the means to pay something, then you are required to do so, basically by being forced into a Chapter 13 case.

Most people who need to file a Chapter 7 case successfully pass the “means test.” The easiest way to do so is to have no greater “income” than the appropriate “median income” for your state and family size. It’s the very specific and rather unusual way “income” is calculated that creates the potential timing advantages and disadvantages.

The Unusual Definition of “Income”

For purposes of the means test:

1) Almost all sources of money are counted as “income,” not just what you might normally think of as income. It usually includes, for example, cash gifts from any source and bonuses from your employer.

2) The period of time during which your income is counted for the means test is precisely the last 6 FULL calendar months before the date of filing bankruptcy. So, this excludes income received more than 6 months ago (such as any bonuses or other sources of money received during most of the first half of this year–as of mid-December when this is beingwritten). “Income” also excludes any money received during the actual calendar month during which your case is filed.

So, for example, if you filed a Chapter 7 case on December 29 of this year, “income” for purposes of the means test would include all money received from precisely June 1 through November 30 of this year. It would exclude money received before June 1 or any time in December.

The Consequences of this Unusual Definition of “Income”

So if you receive a chunk of money anytime in December—say an annual bonus from your employer, or a gift from a parent to help you buy Christmas gifts for your kids—it is not counted for the means test as long as you file your bankruptcy case by December 31. Again, for Chapter 7 cases filed anytime in December, only count money received during the 6 prior full calendar months—June through November.

So in the right situation, the timing of filing a bankruptcy case can make the difference in qualifying for Chapter 7 or not. It can make the difference between passing the means test and writing off all or most of your debts in a Chapter 7 case within a few months from now, or being required to pay as much as you can to your creditors in a Chapter 13 case for the next three to five years.

In our next blog post we’ll show you through an example how this actually works.


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 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.

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