1. When is Chapter 7 a valid option?
If your financial problems are NOT temporary, then filing a Chapter 7 is a legal alternative to discharge (wipe-out) debt. Conversely, if your problems are due to temporary setbacks (illness, unemployment)-Don’t file bankruptcy. Unfortunately, a lot of people in this valley are experiencing ongoing financial problems.
2. What does filing a Chapter 7 accomplish?
Chapter 7 is typically a 90-day process. 30 days after case is filed, there is a required court hearing-Meeting of Creditors. Typically, 60 days after Meeting of Creditors, the bankruptcy is discharged.
Chapter 7 Bankruptcy wipes out all unsecured debt, including credit cards, deficiency balances (money owed on surrendered house & cars) and other personal loans.
3. How fast can bankruptcy be filed?
If there is an urgent need, a bankruptcy can be filed immediately, as the process utilizes electronic filing. For instance, lawsuits, garnishments and other collection activities are all stayed (stopped) when bankruptcy is filed.
4. What is credit counseling?
Credit counseling is a pre-requisite to filing bankruptcy. However, in most instances, the required counseling can be completed via phone or internet immediately if necessary.
5. Who qualifies for Chapter 7 Bankruptcy?
There is a lot of misinformation about this issue. Many people still qualify for Chapter 7 under present law-BAPCPA (Bankruptcy Bill of October 2005). The bankruptcy changes created a scale or index to evaluate a household income versus average-CMI (Current Monthly Income). For instance, if you are a family of four that grosses less than $5,904/month, there is a presumption that you qualify for Chapter 7.
However, even if you are over the set thresholds, a person can still file a Chapter 7 if the net income can be “netted out” with ”real life” expenses. The CMI (Current Monthly Income) utilizes inputted numbers to calculate a person’s disposable income.
6. There is a Gigantic Exception to CMI Test.
If over half of a person’s debt is for “business debt” then the CMI does not apply. In particular, if a person has a lot of debt from “investment properties” or regular business debt, then the CMI may not apply. The only income and expenses to be evaluated are the “real numbers”. If there is a lot of debt, there is oftyen a basis to file a Chapter 7 Bankruptcy.