This is an age old question. You have a lot of debt or maybe you have a modest amount of debt and the creditors are like chihuahuas that just will not leave you alone. Every month is a constant battle- juggling the payment to creditors with paying your bills.
Many of our guests wonder is they qualify for chapter 7 bankruptcy. Sometimes, it can feel like you are not a candidate for bankruptcy when you really are a good candidate for bankruptcy. How do you know if you should be considering chapter 7 bankruptcy? How do you know you even qualify to file a chapter 7 bankruptcy?
I know this seems like a smart ass answer, but if you are thinking about it, you probably qualify to file.
DO I QUALIFY FOR A CHAPTER 7 IF I AM CURRENT ON MY BILLS?
This is a very common question we get. If I am current on my payments to all of the creditors can I still file bankruptcy? Do I have to be delinquent before I can file? No, you do not have to be delinquent to file a bankruptcy. Over the years, many of our guests have been current on all of their bills and they not only qualified to file chapter 7 bankruptcy, but they did file a chapter 7 bankruptcy and got rid of their debt.
Some might ask- why would you file bankruptcy if you are current on your bills? It’s a fair question. For many of our guests, the effort of staying current is sucking the life out of them. The juggling act it takes to keep it altogether is simply too much.
In other cases, our guests are current but they have an event coming up, that when it happens, will bring down the house of cards. For example, the plant you worked at for years might be closing in 2 months and you might sustain a huge drop in income. You maybe going into surgery and will be off for 6 months with little to no income.
Yes, you do qualify to file a chapter 7 bankruptcy even if you are current on all of your bills.
DO I QUALIFY TO FILE A CHAPTER 7 IF I ONLY HAVE 10K IN DEBT?
Yes, you can file bankruptcy on $10k in debt. For me, what I really want to know is 1) how is your credit now, and 2) are you struggling to pay the debt?
I have filed many bankruptcies for guests with modest debt. Everyone’s situation is different. If you are only making $1,500.00 per month, $10k in debt might as well be a million dollars right?
If your credit is already beat up and you struggle to make the payments and your income is modest, I would file a chapter 7 bankruptcy and move on. After your discharge you are debt free, tax free, and you are living in peace without creditors bugging you.
So yes, you can file a chapter 7 bankruptcy with modest debt.
DO I QUALIFY TO FILE A CHAPTER 7 BANKRUPTCY WITH MY INCOME?The bankruptcy code is set up so that those people who have the ability to make payments back to their creditors must do so. Those that do not, can file a chapter 7.
Whether your income is over or under Minnesota’s median income is interesting, but what is more interesting is, whether the you have surplus income after you pay your reasonable and necessary expenses.
Many times, even with guests whose income is over the median income, when you apply their reasonable and necessary expenses to their income, you end up with a negative number and the guest is still able to file a chapter 7 bankruptcy.
Whether you qualify for a chapter 7 bankruptcy, given your income, is really determined by your ability to pay or not. Even guests with income under the median income have to file a chapter 13 bankruptcy if they have the ability to pay part of the debt back given their expenses.
For example, if you make $14.00 per hour - full-time, but you have no real expenses, you cannot file a chapter 7 bankruptcy. If you have no rent expense, no food, expense, no transportation expenses, etc, you would have the ability to make payments back to your creditors. This is a very unusual fact pattern though.
Usually what we see is the opposite. That is, our guest’s income is above the median income, but after we apply their expenses, they have nothing left over.
Whether you file a chapter 7 or chapter 13 bankruptcy is determined by your household budget. Everyone’s case is very different. A qualified bankruptcy attorney can guide you down the right path.
DO I QUALIFY TO FILE A CHAPTER 7 BANKRUPTCY IF I FILED BEFORE?
Yes, you can file a chapter 7 again. The Bankruptcy Code requires that in order for you to file a chapter 7 bankruptcy again, it must be at least 8 years since you filed your last chapter 7 bankruptcy.
Congress changed the time between filing in 2005 when the time line was 6 years to 8 years. Why did they do this? Easy- to protect their wealthy lender contributors. Basically, Congress chucked the poor under the bus, again, and gave a bone to their donors. You can also file a chapter 7 bankruptcy, after a chapter 13 bankruptcy, if it has been at least 6 years since you filed your chapter 13 (and received your discharge). (see Bankruptcy Code Section 727(a)(8) and 727(a)(9).)
COntact a MInneapolis Bankruptcy Lawyer
Many of our guests qualify to file a chapter 7 bankruptcy. I think many, many more Minnesotans who are thinking about bankruptcy but don’t call or reach out would also qualify for a chapter 7 bankruptcy too. I feel bad for those who suffer longer than they should or need to.
Once you get on the other side of this, you feel so much better than before. Don’t have the same regret our guests do- they all regret waiting so long before they got their lives back. Don’t live with regrets, reach out to someone for help today. You will be glad you did.
100 South Fifth Street #1900
Minneapolis, MN 55402