Chapter 7 Bankruptcy Is A Bad Idea If…
Wondering if Chapter 7 bankruptcy is a bad idea? Read on. We’ll go over the pros and cons of filing Chapter 7 bankruptcy. Hopefully, by the time you finish this article, you’ll have a better idea of whether or not it’s a good option for you.
Chapter 7 Bankruptcy Is A Bad Idea If You Can Afford To Repay Your Debt
Chapter 7 bankruptcy’s purpose is to help people who have overwhelming debt overcome their financial struggles. If you have the ability to repay your unsecured debt in two to three years, bankruptcy is probably a bad idea. Of course, that doesn’t mean you should overwork yourself to pay off that debt or subsist on a diet of nothing but rice and beans.
If it would take longer to pay off your debt, bankruptcy can out you on the path to secure your financial future. It will allow you to build savings, buy a home, and give yourself and your family the life you once imagined.
Chapter 7 Bankruptcy Is A Bad Idea If You Make Too Much Money
In order to file Chapter 7 bankruptcy, your household income has to be below a certain amount. You can see the income limits here. When we prepare your bankruptcy petition, we have to complete Form 122-A1, otherwise known as the means test. It needs to show that there is no “presumption of abuse,” meaning that you are eligible for Chapter 7 bankruptcy.
If your means test indicates that your Chapter 7 would be an abuse of the Chapter 7 bankruptcy process, there are certain, very limited ways to qualify for Chapter 7. Those include having high child care, child support, or spousal maintenance (alimony) expenses.
You might also qualify for Chapter 7 bankruptcy if your business or non-consumer (e.g. taxes) debt exceeds your consumer debt (e.g. credit cards). We can disregard the means test in that situation, but it is very fact specific. We’ll need detailed documentation for your debt to tell you whether or not you might be able to file Chapter 7 even if your income is over the income limits.
If your income is over the Chapter 7 bankruptcy limits, and we can’t get you to pass the means test, then we can look at Chapter 13. Chapter 13 is a three to five year commitment, though. We’ll discuss it at length if that is something you want to pursue. There are many times where Chapter 13 is a better option than Chapter 7.
Chapter 7 Bankruptcy Is A Bad Idea If You Have Valuable Assets
Chapter 7 bankruptcy is also known “liquidation” bankruptcy. What that means is that any non-exempt (unprotected) assets can be sold and the money from the sale will be used to pay your creditors.
During our initial consultation, we’ll go over any assets you have that can be potential cause for concern. We absolutely do not want you to lose anything, and the last thing we want are any surprises. We’ll talk about the risks and your options before we file your case.
Chapter 7 Is A Good Idea If You Need A Fresh Start
Chapter 7 bankruptcy is without a debt the most effective way to battle overwhelming debt. It can eliminate most debt and help you rebuild your credit to secure your financial future. Contrary to popular myth, most Chapter 7 bankruptcy filers will see their credit score skyrocket within 12 months of filing.
The US Constitution and Congress enacted the bankruptcy laws to provide the relief people need when they have been hit by unforeseen events. It’s your right to take advantage of the bankruptcy laws to get the relief you need.
Talk To An Experienced Denver, Colorado Bankruptcy Attorney To See If Chapter 7 Bankruptcy Is Right For You
If you’d like to know if Chapter 7 bankruptcy is a bad idea, we’d love for you to come in for a free consultation with a top-rated Denver, Colorado Chapter 7 bankruptcy attorney. We’ll answer all your questions and discuss all of your options. If we think Chapter 7 bankruptcy is a bad idea for you, we’ll tell you.