Filing Bankruptcy Again – Strategies to Avoid Chapter 13
The basic qualifications to file bankruptcy again remain the same. U.S. citizens, army personnel serving over seas, and any person who owns property or does business within the U.S. may file bankruptcy. Chapter 7 imposes additional restrictions based on a previous case. You cannot re-file Chapter 7 within eight years of a prior Chapter 7 discharge, or within six years of a prior Chapter 13 discharge (unless unsecured creditors received at least 70% of their total debt), or if a prior case was dismissed with prejudice within the last 180 days.
The means test poses the greatest hurdle if filing Chapter 7 again, and determines the amount of the monthly payment owed to a Chapter 13 trustee.
The means test became effective in late 2005. Since that time, all people who file bankruptcy under either Chapter 7 or Chapter 13 must take the test. In theory, the test measures monthly disposable income for each debtor. The calculation starts with total income, subtracts expenses, to find disposable income (Accountants call this discretionary income). If filing jointly with a spouse, total household income, less allowed monthly expenses, determines disposable income.
Importantly, disposable income is a far different measure under the U.S. Code than the common understanding of discretionary income. In the later case, expenses include all basic necessities based the current cost of goods. This basic concept is absent in the U.S. Code definition of disposable income.
The test imposes national standard allowances and local standard allowances for the majority of allowed expenses used in the test. Debtors may not deduct any expense unless specifically authorized. Further, as a rule, necessities, the actual cost of living, actual cost of goods, and historical expenses of each debtor are irrelevant.
In a few important expense categories however, the test does permits debtors to deduct actual expenses. Additionally, debtors may also petition the court for a 5% increase in a few standard allowances for good cause shown.
The test uses monthly disposable in a three-pronged test. First, if the debtor(s) earns more than their state median income, Chapter 7 is not available unless qualifying under two exceptions. These exceptions apply in limited circumstances when the means test measure of disposable income is less than $200.
Taking the test the first time is frustrating for most people. The mandatory allowed budget is not adequate in many situations. Yet many opportunities exist to change results, and even improve results substantially over time.
The test relies on income and expenses over last full six months. Each month, test results change. The oldest month disappears and latest month becomes part the test. Over six months, the test result is entirely new.
Small changes in lifestyle may qualify a debtor to file Chapter 7. Debtors who become acquainted with the test and a few advanced bankruptcy strategies may swing the test result dramatically. To swing the test in your favor, you must know how to calculate income, the expenses used in the test, and the expenses that remain irrelevant. When taking the test, time and knowledge combine into the power to exert great influence over next five years of your life.
If you pass the test, you may discharge all debt in as little as four months and receive a final order closing the case. If you fail the test, you must repay at least a portion of all debts and live on a mandatory budget under court supervision for the next five years.
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This article explores limitations, risks and opportunities when filing Chapter 7 bankruptcy again. The author advocates comparing alternative debt relief options, while and preserving all Chapter 7 rights, to insure the quickest financial recovery.
Bankruptcy is very often a time-sensitive process and pre-bankruptcy planning can be critical in protecting assets. Chapter 7, in particular, the trustee's responsibility is to "look back" at the actions the debtor has taken to insure that there hasn't been a fraudulent conveyance of assets, a non-allowed preference payment to creditors or other actions that might leave assets exposed. It's critical, if you are considering bankruptcy, to consider taking the following steps to insure a successful
Students from both private and public universities all over the country may also provide low cost or free advice. The sessions will only achieve directing clients to the right legal path in filing the right papers. Note that with the new bankruptcy laws taking into effect making the bankruptcy filing process more difficult than usual, an experienced bankruptcy attorney will be worth your money.
Many people who enter the bankruptcy process worry about the fate of their credit. This is actually unnecessary as the bulk of credit damage happens before the bankruptcy process is even initiated. While no one wants the added hassle of rebuilding their credit after resolving debt troubles, doing so can put you leaps ahead of others in the credit game.
Americans are now filing Chapter 7 or 13 Bankruptcy to get their debts under control. Bankruptcy in itself is designed for debt elimination. Chapter 7 bankruptcy functions to cancel out unsecured debt such as utility or medical bills, credit card, etc. Chapter 13 Bankruptcy on the other hand is designed to give individuals more time in repaying all their debts.
Filing for bankruptcy is good news whenever you are struggling with your credit card debt, mortgage or medical bills. Bankruptcy laws help families and individuals in their debt struggles. You have two options on how to deal with your debt problems, Chapter 7 (debt elimination) and Chapter 13 (reorganization). Always remember that you can regain credit again after successfully filing your bankruptcy.
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All debtors cope with credit hurdles once or twice. In drastic positions, the suggestions of California bankruptcy lawyers might be indispensable. As a rule credit card holders arrive at an initial interview unsuspecting.
The Chapter 7 bankruptcy means test predictes the extent of assistance available and the time a case may last. When completing the test, expertise is power.
The limitations of the automatic stay are different in Chapter 7 bankruptcy and Chapter 13 bankruptcy cases. The chapter you select should optimize your filing strategy to receive maximum benefits. A few months to prepare will enable homeowners to retain their homes and restructure debts profitably, and perhaps avoid filing altogether.
Stop foreclosure dead in its tracks with the bankruptcy automatic stay. Filing automatically invokes a federal prohibition against continued collection of debts, repossession, foreclosure, and the enforcement of mortgage liens.
Find out when to use Chapter 13 bankruptcy rather than Chapter 7 to gain the greatest benefit when filing. The rules for each chapter are different and the advantages may multiply exponentially when converting from one chapter to another.
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