I love the Internet. It is a seemingly bottomless source of information and Google is the first place I stop if I am researching something. That said, I am also one of the most skeptical people my wife has ever met. So I always bounce anything I find on the Internet off of several sources to make sure that what I find is accurate.
Many people who come in to see us for an initial consultation have done some online research about bankruptcy. Some have done just enough to know they need to talk to an attorney to get more information. Others have done more digging and come to the consultation with their own conclusions about what their best course is. Most often it is whether they qualify for Chapter 7 or Chapter 13 bankruptcy.
While determining whether someone qualifies for Chapter 7 is not particularly difficult, it does require a thorough knowledge of the bankruptcy code and will generally not come from skimming a few blog posts or online forums about the subject.
The first step in determining whether someone qualifies for Chapter 7 bankruptcy is to determine their annual household income. This requires looking at all income sources, including that of household members who may not be filing bankruptcy. Also important is that we will be using before tax income, not what someone takes home in their paycheck.
Next, we compare that number to the median income for their household size. Current median income numbers can be found here.
If their household income is below the current median income, then that is usually the end of the calculation. However, if their household income is over the median income, we are going to have to go further. It’s possible for someone whose household income is over the median income to qualify for Chapter 7, but we have to have more information about their household expenses and even their debts.
That’s where the knowledge of an experienced bankruptcy lawyer is needed. An experienced lawyer will scrutinize those expenses and debts to see if there is a way to qualify someone for Chapter 7. Someone with less experience may not know, for example, that if more than 50% of someone’s debts came from a failed business, it doesn’t matter what their household income is and that Chapter 7 is an option for them.
Even if someone does qualify for Chapter 7 bankruptcy, that doesn’t mean that is the best course for them. There are several reasons why someone should file Chapter 13 instead. Again, that is where the advice of an experienced bankruptcy lawyer helps.
If you have questions about whether you qualify to file Chapter 7 bankruptcy, we hope you’ll come in for a free, no-obligation consultation with an experienced Colorado bankruptcy attorney. You can call 303.331.3403 to schedule an appointment or use our online scheduling system.