Are you currently struggling with so much debt, you have no idea how you’re
going to pay it off? If so, there’s a good chance that interest
and penalties are adding up by the day and from where you’re standing,
it looks like there’s no end in sight.
If your monthly bills far exceed your monthly income, you may want to seriously
consider filing a Chapter 7
bankruptcy. With a Chapter 7, many types of unsecured debt can be “erased”
or “wiped out.” When debt is discharged through a Chapter
7, it means the debtor is no longer legally obligated to pay it.
Common types of debts that are discharged in a Chapter 7:
- Medical bills
- Credit card debt
- Certain taxes (older than 3 years)
- Personal loans
- Utility bills
- Cellphone bills
- Money owed for renting a home or apartment
If you have a lot of medical or credit card debt, a Chapter 7 bankruptcy
may allow you to wipe out most, if not all of that debt. Debtors in general
find Chapter 7 very attractive because it allows people to discharge many
types of debts without having to pay anything towards them, especially
in "no-asset" cases where the debtors don't have assets
Though Chapter 7 bankruptcy is often the “preferred” bankruptcy
for debtors, not everyone qualifies. Basically, Chapter 7 is reserved
for low-income filers who really need it.
For debtors with a decent-paying, regular job, they may have to file a
Chapter 13, debt-reorganization bankruptcy instead – but even the
Chapter 13 has many benefits as well.
You Must Pass the ‘Bankruptcy Means Test’
Are you interested in filing Chapter 7 bankruptcy? If so, you must pass
what is called the “Bankruptcy Means Test” first. Essentially,
if your income is below New York’s median income for a household
of your size, you automatically pass the test.
If your income is too high, you’ll be diverted to filing a Chapter
13 bankruptcy instead. With a Chapter 13 bankruptcy, debtors enter into
a repayment plan. With the plan, they make monthly payments for 3 to 5 years.
With a Chapter 13, debtors pay off all or a portion of their debt over
the life of the repayment plan. How much are the payments? It all depends
on the amount of the debt, and how much disposable income the debtor has
The repayment plan is supposed to be manageable. If it wasn’t, it
would defeat the purpose! If you are interested in filing Chapter 7 or
Chapter 13 bankruptcy, we can help you determine which bankruptcy is right for you.
To get started,
contact The DeLorenzo Law Firm today!