Chapter 7 is the type of bankruptcy that you usually think of when you see fancy commercials that say save your house, keep your car, etc.
That is because usually most of the things we own really do not have that much value so what you own in your house/apartment you can usually keep. If you own a house, usually you have a mortgage and in addition to your homestead (the amount of equity you get to protect, $179,975 per owner), it usually has a higher value than the amount the house is worth. If that is the case, then you satisfy the first part of the test. Cars are usually the same. People own a car(s) that have a loan/lease on them and really have no re-sale value over your car exemption or it is an older car you own and does not really have a re-sale value over your car exemption.
The second part is your income. The bankruptcy code wants to know how much you make to see if you have extra money each month to pay towards your creditors. If your income is below the median yearly income for your household then the court thinks you do not have money to pay creditors. If it is above the median yearly income, then the court thinks you might have money to pay creditors and subjects you to a new test called the “Means Test” to see if you actually have extra money after expenses to pay your creditors.
For most people who own a house with a mortgage even if you are above the amount, you will pass the Means Test and be allowed to file a Chapter 7 Bankruptcy. A Chapter 7 Bankruptcy will discharge all the debt you have except most things owed to the government, student loans and child support. If you “fail” the Means Test, meaning the test shows that after expenses, then you will not qualify for a Chapter 7 but would for a Chapter 13.
When you choose the Law Offices of Gregory A Flood we will consult with you to go over your financial situation and see if Bankruptcy is right for you.
So do not wait and contact us for a free consultation today.