Chapter 7 bankruptcy is the most effective form of bankruptcy to eliminate unsecured debts. Unsecured debts include credit card bills, medical bills, and many other forms of debt that people commonly face. Since Chapter 7 is so effective in eliminating these types of debts, it is no surprise that many people would want to make use of it. Unfortunately, not all people can qualify for Chapter 7. There are several qualifications and characteristics an individual must meet to qualify. Even if you do not qualify for Chapter 7, you may have additional options to handle your debt.
The Roseville bankruptcy attorneys of The Bankruptcy Group understand that every financial situation is different. Therefore, we always spend the time getting to know your story and your bankruptcy goals. After listening and analyzing your finances, we can make personalized recommendations in how to reduce or eliminate your debt. The following list includes some of the reasons as to why we may recommend bankruptcy and non-bankruptcy options other than Chapter 13.
1. You Recently Received a Bankruptcy Discharge or Your Case Was Dismissed
If you have received a Chapter 7 bankruptcy discharge or a Chapter 13 discharge, you may not be eligible to receive another discharge. A bankruptcy discharge generally means that the court has wiped away your debts at the end of the bankruptcy process. If you have received a Chapter 7 discharge within the last eight years or a Chapter 13 discharge within the last six years, you will need to wait a sufficient amount of time before you are eligible to file again.
Likewise, if your case was dismissed by a court, you must also wait 180 days before you can file again. Reasons a court may dismiss a bankruptcy filing include: a violation of a court order, a filer’s request for dismissal, or the court’s belief that the filing was fraudulent.
Unfortunately, an adjudication of a fraudulent filing can have a lasting effect on your ability to file for bankruptcy. A court may dismiss a case for fraud when the filer transfers certain property to family members prior to the filing, and particularly so when the transfer is for far below market value. If the filer purchases numerous luxury items before filing in the mistaken belief that (s)he can simply wipe away the debt through bankruptcy, the court may believe that fraud has occurred. Lying about your income or debt can also indicate fraud.
2. You Cannot Satisfy the Means Test
Following the 2005 bankruptcy reforms, Chapter 7 instituted a means test to allow only “deserving” individuals to enter into the Chapter. This signifies that you do not have excess income that would allow you to pay off the debts over time. The means test first compares your monthly income against the California State median. If your income is below the median, you are eligible for Chapter 7 bankruptcy. If the income equals or exceeds the California State median income, you proceed to a second stage of the means test. At this stage, the amount of disposable income you have is analyzed. If the income you have left after satisfying obligations exceeds a certain amount, your Chapter 7 filing will be dismissed.
3. The Chapter 7 Filer Failed to Engage in Credit Counseling
This reason for ineligibility for Chapter 7 is an avoidable one. All filers for Chapter 7 are required by the U.S. Bankruptcy Code to engage in credit counseling within the 180 days prior to the filing. The credit counseling can help you understand whether other options to bankruptcy exist. You must include a certificate of completion of credit counseling with your Chapter 7 filing.
Work with Skilled Roseville, California Bankruptcy Lawyers
Even if you don’t qualify for Chapter 7 bankruptcy, you may be able to renegotiate debts and obligations through a California bankruptcy attorney. And, depending on the reason you are intelligible for Chapter 7, you may still be able to file for Chapter 13. Chapter 13 bankruptcy doesn’t eliminate debt as quickly as a Chapter 7 filing, but it can provide a debtor with significantly more time to repay the debts while streamlining the repayment process.
To discuss whether Chapter 7 bankruptcy, Chapter 13 bankruptcy, or an alternative to bankruptcy is right to handle your debts, call The Bankruptcy Group today at 1-800-920-5351 for a free consultation.