How Can I File for Bankruptcy?
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Bankruptcy eligibility is not a quick yes or no answer, and in fact, requires a thorough analysis of your income through a bankruptcy means test. Read more.
Filing Bankruptcy with Experienced San Diego Attorneys
If you are considering bankruptcy, one of the first questions you may have is whether you can file for bankruptcy. Bankruptcy eligibility is not a quick yes or no answer, and in fact, requires a thorough analysis of your income through a bankruptcy means test.
If you have filed for bankruptcy before, that can also affect your eligibility. At the San Diego and Riverside County, California, law firm of Chang & Diamond, APC, our job as San Diego filing bankruptcy attorneys is to inform you of your options regarding Bankruptcy and debt relief so that you can make a fresh start — as many of our former clients have done.
Contact the San Diego bankruptcy attorneys at Chang & Diamond, APC, today for a free initial consultation. We can discuss with you bankruptcy qualifications, your individual case, and whether bankruptcy is possible.
What to Examine When Considering Filing Bankruptcy
Not everyone can or should file for bankruptcy, as every person’s financial dilemma is different. However, here are a few general questions to ask yourself initially if you are considering Chapter 7 or Chapter 13 bankruptcy:
Debt collectors calling you constantly at home or work?
Behind on credit card payments or only making the minimum?
Large unpaid medical bills not covered by insurance?
Any pending judgments against you?
Are your wages garnished?
Are you behind on taxes?
If any of these situations sound like yours, bankruptcy can help you regain financial stability.
Bankruptcy Reform and How It Affects Your Eligibility
You may have heard about recent changes in the law that have eliminated eligibility for some people considering Chapter 7 bankruptcy. The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 now provides that one must pass a bankruptcy means test in order to qualify for Chapter 7 bankruptcy liquidation.
Those who cannot must then consider Chapter 13 debt reorganization. The median income level determines whether you must even take the means test. If your income level is below this, then you are Chapter 7-eligible.
If you are above, you must apply the means test. The purpose of the means test is to determine whether a bankruptcy candidate has any disposable income with which to pay back all or part of the underlying debt. Other factors that are considered, like household size, age, and cost of living expenditures, include:
Current wages, salary, tips, commissions, or bonuses
Any business income, rents, or royalties
Unemployment or disability
Retirement funds such as pensions
Child or spousal support payments
Filing for Bankruptcy Again
If you have filed for bankruptcy in the past, this does not mean you are ineligible now. Unless you had debts discharged under Chapter 7 within the last eight years or filed for Chapter 13 within the last six years, you can still currently seek to file for bankruptcy.
However, you are also ineligible if you had a dismissal due to a violation, failure to appear, or request within the last 180 days from the current filing under either Chapter 7 or 13.
How Do I Determine Which Type of Bankruptcy Is Right for Me?
Determining the right type of bankruptcy for your situation involves several factors. First, assess your financial situation by reviewing your credit report, pay stubs, and outstanding debts, including personal loans, car loans, and tax debts. Consulting a bankruptcy lawyer can provide expert advice tailored to your specific circumstances.
The two most common types of bankruptcy are Chapter 7 and Chapter 13. Chapter 7 is generally quicker and discharges most unsecured debt like credit card debt, but you may have to liquidate some assets. It’s best suited for those with limited income and assets. You’ll need to pass a “means test” to qualify, which compares your income to the median in your state.
Chapter 13, on the other hand, allows you to keep your assets but requires a 3-5 year debt repayment plan for secured and unsecured debts. This is often suitable for those with regular income and debts like child support or secured debt that can’t be discharged.
Before filing for bankruptcy, you’re required to complete a credit counseling course from an approved credit counseling agency. After filing, a debtor education course is also mandatory. Both courses aim to educate you on bankruptcy basics and financial management.
What Is the Role of a Bankruptcy Trustee, and How Are They Appointed?
A bankruptcy trustee plays a critical role in overseeing your bankruptcy case. Appointed by the bankruptcy court, the trustee’s responsibilities vary depending on the type of bankruptcy you file. In a Chapter 7 case, the trustee may liquidate your non-exempt assets to pay off creditors. In a Chapter 13 case, the trustee manages the repayment plan, distributing payments to creditors.
The trustee also reviews the bankruptcy forms you submit, verifies the information by examining documents like pay stubs, and may even negotiate with credit card companies or other creditors. They ensure that you comply with the bankruptcy code and local bankruptcy court rules.
Filing fees and attorney fees are part of the bankruptcy process, and if you can’t afford an attorney, you have the option of filing pro se, or representing yourself. However, given the complexities involved, consulting a bankruptcy lawyer is generally recommended. The trustee is assigned a bankruptcy case number by the court and is an integral part of ensuring the process is conducted fairly and transparently.