Under the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) of 2005, bankruptcy attorneys must inform their clients of the different bankruptcy “chapters” , i.e. Chapter 7, Chapter 13, etc. Of course, I do that in my initial consultation. Before the end of the consultation, I usually have a good idea of whether or not my client should file Chapter 7 or Chapter 13.
I will generally recommend a Chapter 7 bankruptcy petition if my client:
- is well within the income limits for Chapter 7 under the means test and has no excess income beyond her living expenses;
- has primarily, if not all, unsecured debt;
- has no non-exempt property.
Choosing the right bankruptcy chapter under which to file is crucial. It can mean the difference between a fresh start or simply putting off the inevitable, such as letting a home that is beyond your means go into foreclosure instead of barely keeping your head above water with Chapter 13 plan payments.