If you make a significant income it will not stop you from filing for a Chapter 13 debt consolidation plan; however it might prevent you from filing a Chapter 7. The ability to file a particular chapter of bankruptcy depends on your income, your assets, and your deductible expenses. Our Montgomery bankruptcy attorneys and Selma bankruptcy lawyers deal with these issues every day, and we are able to find solutions that work for most clients.
In many instances, people want to file a Chapter 7 bankruptcy because it will eliminate most, if not all of their unsecured debt such as credit cards, medical bills, and collection accounts, and it doesn’t require a monthly payment to creditors over a period of three to five years. However, there are strict requirements that a debtor must meet to qualify for a Chapter 7 discharge. The main requirement is that the debtor passes a two-step means test. If the means test cannot be passed by the debtor, then the only option available to that debtor is a Chapter 13 bankruptcy.
The first part of the means test is whether your family income or household income is less than the median family income of your state. If so then you automatically qualify for Chapter 7 bankruptcy. If not then you must move to the second portion of the means test. In the second portion of the means test, one must examine what deductible expenses the debtor has to offset the state’s median income. Basically, the debtor is able to subtract certain expenses from his income to see if he will qualify for Chapter 7 bankruptcy. These expenses include certain mortgage and rent expenses, vehicle and transportation expenses, utility bills, food, child care expenses, income taxes, mandatory payroll deductions, charitable contributions and life insurance premiums. After these expenses are deducted, we can examine the means test to see if you would qualify for Chapter 7 bankruptcy. If you do not qualify then the only option available would be a Chapter 13 debt consolidation plan. We understand that these can be complicated issues. If you have questions act now by calling or texting us at 334-LAWYERS (529-9377). Our phone lines are answered 24 hours a day and we can usually meet with you within 24 hours. All consultations are free! Remember that doing nothing changes nothing so contact us immediately!
In a Chapter 13 debt consolidation plan there is no income limitations. If you don’t pass the means test it’s likely that you’ll be able to reorganize all of your debt under Chapter 13 debt consolidation plan. If your secured debt exceeds more than 1.1 million dollars and your unsecured debt exceeds more than $400,000 then you are likely only going qualify for Chapter 11 bankruptcy. Only 1% of the people in Alabama would have to file for a Chapter 11 bankruptcy. In a Chapter 13 debt consolidation plan you’ll pay your disposable income into a three to five-year repayment plan. After your repayment plan is complete the court will discharge most of the remaining unsecured debt balances. Also, any priority debt or secured debt that is added to the bankruptcy plan will be paid and you will no longer be responsible for those debts. A Chapter 13 debt consolidation is generally a better option than a Chapter 7 bankruptcy case. When you are facing the foreclosure of your home, the repossession of a car or when you need time to pay a debt that will not get eliminated through a Chapter 7 such as child support alimony or taxes. Each person’s case is unique and easy way to determine the most advantageous approach is to meet with a knowledgeable bankruptcy attorney like those at The Sellers Law Firm.
Our Montgomery bankruptcy lawyers and Selma bankruptcy lawyers know that the issues involved in a Chapter 13 or Chapter 7 are very likely new and unique to you. For that reason, we suggest that you set an appointment and meet with one of our knowledgeable attorneys. We have offices throughout Central Alabama. We are located in Montgomery, Selma, Greenville, and Troy. All consultations are free, and we can usually see you within 24 hours. Call us at 334-LAWYERS (529-9377) to set an appointment or use the “text us” link or Contact Form on our website. Our phone lines are answered 24 hours a day! Remember that doing changes nothing so act today!
The Sellers Law Firm is designated a debt relief agency by an Act of Congress and the President of the United States. We have proudly assisted people seeking relief under the U.S. Bankruptcy Code for four decades.