Bankruptcy Attorney in Royal Oak, Michigan
Chapter 7 bankruptcy is one of several options for getting rid of or reducing your debts. This allows you to liquidate your assets and utilize the proceeds to pay off your creditors. Most of the time, debtors choose to file under chapter 7 because it is faster and not that complicated than other alternatives.
So are you deeply in debt and looking for a way out through Chapter 7 bankruptcy? If yes, do you know the qualifications needed in filing a bankruptcy petition under Chapter 7?
Learn more about Chapter 7, bankruptcy trustee, and who can’t file for a Chapter 7 bankruptcy. You can also talk to helpful Royal Oak bankruptcy lawyers at Hammerschmidt, Stickradt & Associates or HS&A, P.C. Our Michigan bankruptcy law firm aims to help individuals and families manage their financial situations and get out of debt by
What do I need to know about Chapter 7?
Chapter 7 is classed as a liquidation chapter. Under it, a bankruptcy trustee will round up all of your non-exempt properties and sell them to pay off your unsecured debt (debts that have no collateral in place).
You may be concerned that you will be left with nothing at the end of the liquidation process, but you should not be since state laws safeguard your exempt or other personal property.
Personal property with a total value of $3,825 may be retained under Michigan state law. Household goods and items are also covered under this exemption, such as pieces of furniture, clothes, appliances, and books. Jewelry worth up to $600 per piece is also covered, as well as computer equipment worth $650. The exempt property also includes retirement/pension benefits and life insurance.
What is a bankruptcy trustee?
A trustee is sort of an administrator who manages your non-exempt properties’ liquidation. They are entrusted with making recommendations to the court regarding your case. They will also examine your bankruptcy petition for any irregularities or indications of fraud.
Who cannot file for Chapter 7?
If you want to file a Chapter 7 bankruptcy petition, you should keep in mind that there are qualifications that you must meet in order to do so, such as passing a “means test”. You should be aware of the following situations where you will not be eligible to file under Chapter 7.
You have enough money to pay off your debts.
The first thing you have to do is compare your current monthly income to the median income in your state for a family of your size. Current monthly income refers to the average of your earnings in the past six months before your bankruptcy petition filing.
You should keep in mind that if your current average monthly income is less than the median income, you can file for Chapter 7 bankruptcy, presuming you meet other requirements.
If your typical monthly income is higher than the median, you will be required to complete a means test.
The Means test helps to separate persons with high earnings from those with low incomes. This is essentially a formula that determines whether a person is qualified to file a Chapter 7 bankruptcy petition. The means test is used to determine if a debtor is abusing the bankruptcy system by filing Chapter 7 bankruptcy petitions when they could afford to pay at least some of the debts they owe to their creditors.
Keep in mind that if you, a debtor, fails this test, you can only file for Chapter 13 bankruptcy. The means test computations get more challenging for people whose family income surpasses the state median. After paying your allotted monthly expenses, you must evaluate if you have enough money left over (referred to as “disposable income”) to pay down at least some portions of your unsecured obligations. If your disposable income exceeds a specific amount, you fail the means test and are ineligible for a discharge under Chapter 7 bankruptcy.
You have previously received a bankruptcy discharge, or a previous bankruptcy case has been dismissed within the last 180 days.
Individuals who have had a Chapter 7 bankruptcy discharged within the last 8 years are not eligible to petition for a Chapter 7 bankruptcy.
Furthermore, if you have a previous Chapter 13 bankruptcy case that was discharged within the past 6 years, your bankruptcy Chapter 7 petition will be denied. A filer’s case maya also be rejected for one of the following reasons:
- There is a violation or non-compliance with the court order.
- Willful failure of the debtor to appear in court.
- The bankruptcy case has revealed evidence of fraudulent acts.
- The debtor voluntarily requested that the bankruptcy case be dismissed.
You do not have a credit counseling certificate.
In most states, they require you to undergo credit counseling before you can qualify to file for a bankruptcy petition. Credit counseling is an intervention before you file for a bankruptcy case.
Here, the counselor will lay out the different alternatives you can take besides filing for a bankruptcy petition. It assists you in determining whether or not bankruptcy is the best option for your situation.
The counselor will review your financial information, such as your income, assets, expenses, debts. Based on the information you provide, the counselor will recommend a personal budget plan.
If you still believe that filing for bankruptcy is the best option for you, you may proceed, but remember to keep the certificate that the counseling agency will provide you since you will need to show it together with your bankruptcy petition and papers.
File your bankruptcy petition with our help!
Filing for bankruptcy may appear simple, but it is not. There are several hurdles that must be overcome in order to be eligible to petition for Chapter 7 bankruptcy. During your bankruptcy proceedings, you may encounter situations in which you do not understand certain legal terms. As such, seeking help from a bankruptcy lawyer resolves this issue.
Our mission at Hammerschmidt Stickradt & Associates is to successfully assist you in your time of financial need. We will help you in determining the best path to debt relief for you. However, our goal does not end when you are debt-free. We also wish to safeguard your financial start-up by providing you with a credit rebuilding program. Call our law firm to know more about our services and schedule an initial consultation with one of our reliable bankruptcy attorneys.