A More Complicated Chapter 7 Case

A More Complicated Chapter 7 CaseIn the simplest version of a Chapter 7 case:

  • you easily pass the “means test” based on your income
  • all your assets are protected by “exemptions”
  • you either have no debts with collateral or else are current on these debts, and
  • all your debts get discharged (legally written off).

But what if your case isn’t so straightforward?

If Your Income isHigher than “Median Income” . . .

Under the “means test” you immediately qualify for Chapter 7 if your income is no more than the designated median income for your state and family size. In Texas, here are the current median income amounts by family size):

$46,709 $61,704 $65,713 $76,842

*Add $8,400 for each additional family member.

(These amounts are for cases filed on or after May 1, 2017, and change periodically.)

The definition of “Income” for the “means test” is a broader than normal taxable income, but excludes any Social Security benefits. And it’s calculated by precisely totaling money received during the prior 6 full calendarmonths, and doubling that to get to the annual income amount.

However, if your income is more than these median amounts, you may still be able to file Chapter 7 based on your expenses or other unusual financial or personal circumstances. When you meet with us we will determine whether you can pass the means test based on other than just your income.

If Some of Your Assets are Not Protected by”Exemptions” . . .

In most Chapter 7 cases everything you own is covered by property “exemptions.” If not, that adds a complication to your case.

However, if you have an asset that the trustee could take from you because it is not exempt does not necessarily mean that will happen. If the asset can’t be sold for much money, the trustee may decide that it will not generate enough proceeds for a “meaningful distribution to the creditors.” That is, it may not be worth the hassle of collecting it. Or the asset may require the trustee to spend money to turn it into cash, and he or she is not willing to invest this money because the amount generated may not justify doing so. Or even if the trustee decides an asset is worth selling, you may be able to keep it by arranging to make monthly payments for it, effectively buying back your rights to the asset.

If You Are Behind on Secured Debts . . .

First, you can surrender any collateral to the creditor, and then discharge any remaining debt. This is an important benefit because outside of bankruptcy the amount you could owe on a surrendered vehicle or foreclosed second mortgage, for instance, could be quite large.

Second, if you were behind on a mortgage or vehicle loan, the creditor may be willing to allow you to catch up with monthly payments. This greatly depends on the nature of the debt and the flexibility of the creditor. For example, major vehicle loan creditors tend to be very inflexible, requiring you to get current within a month or two after filing. Based on our experience we tell you what your particular creditors will likely be willing to do.

If You Have Debts That Aren’t Going to Be Discharged . . .

Most of your debts, and maybe even all of them, will get discharged—permanently written off. So it’s important to figure out whether you have any debts that won’t get discharged. And if you do, you need advice about whether you need the extra protection of Chapter 13 to deal with those debts.

Some debts are clearly not dischargeable, some clearly are, while some are unclear. The discharge of some debts can be challenged by the creditor. Judgment calls about these issues are good reasons to have an experienced bankruptcy lawyer in your corner.

At the Law Offices of Carrie Weir, our job is to help make your Chapter 7 case proceed smoothly, especially if your case has a complication or two. Let us put our extensive experience to work for you. If you are in the Dallas-Fort WorthMetroplex, contact me, Carrie Weir, at 972-772-3083 to discuss your options. I have 20 years of experience doing this. My office is in Rockwall, so my clients tend to come from there and Heath, Greenville, Lavon, Wylie, Mesquite, Royse City, Sachse, and Rowlett, Texas. I’d be happy to provide you a free and confidential consultation. Or if you want to contact me outside of business hours,use this this contact form .

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