Philadelphia Chapter 7 Bankruptcy Lawyer
If you are struggling to make ends meet, you may benefit from talking to us about filing for bankruptcy under Chapter 7. About eighty percent of people who file for bankruptcy file under Chapter 7. Chapter 7 is a popular form of relief because it offers the fastest and most inexpensive way to wipe away debts. Most debts are discharged (that is, wiped away) in about four to six months from the time when the petition is filed. But as with all good things in life, there is a catch. In fact, there are two catches.
Qualifying for Chapter 7 by Income
The first catch is that you must qualify by income in order to file for Chapter 7. You must make less than your state’s average income for your family size. For example, in Pennsylvania, the average income for a single individual is about $47,000.00, and for a family of two it’s about $55,000.00. In New Jersey, the average income for a single individual is about $61,000.00, and for a family of two it’s about $69,000.00.
You should check the most recent reports from the Census Bureau regarding these averages. Also, please note that your yearly income for the purposes of filing for bankruptcy is not the same as what you list on your tax return. The calculation is a bit more complex. Additionally, it is also important to accurately list your income and expenses in order to qualify for Chapter 7. Lastly, the state average incomes quoted above are not absolute cutoffs. Even if you make more as a family than those figures, we may be able to squeeze you into a Chapter 7. That is why you should consult with an attorney before filing for bankruptcy. We are seasoned bankruptcy experts, and we are happy to walk you through the intricacies of the monthly income calculation.
Protecting Your Assets in Chapter 7
The second catch is that you may own too many assets to file under Chapter 7. The technical name for the Chapter 7 bankruptcy is a liquidation, which refers to liquidation of assets, not debts. Think of Chapter 7 as a bulldozer that runs over your debts, but it can run over your assets, too, without proper planning. Generally, if you own a home that has significant equity, you may want to file under Chapter 13. However, it depends on how much equity you need to protect. Equity is the difference between what your current total mortgage balance and the value of your home. If that difference is greater than about $25,000.00, you will not be able to receive a discharge without contributing money into your Chapter 7.
Debts that Cannot Be Wiped Away
And now for the fine print. Some debts cannot be wiped away by bankruptcy, no matter what chapter you file under. For example, student loans, domestic support obligations like child support and alimony, traffic fines, and recent tax debts, will all stay with you even after your bankruptcy is concluded. Those debts will only go away if they are paid. In order to assess which debts are dischargeable and which are not, it is important to see an attorney.
Why You Should Talk to a Bankruptcy Lawyer
We cannot stress this aspect enough. Deciding between the two chapters requires experience and knowhow. It is far easier for our lawyers to guide you in the right direction than for yourself to struggle alone. We are able to advise you, because as Bankruptcy Lawyers, we have seen your situation many times before, and we know how the trustees and judges in Philadelphia, Trenton, and Camden will react. Bankruptcy has long-term consequences, and although most filings are straightforward, problems can crop up in any case. What you may think is insignificant may end up being important, and vice-versa. Our consultations are free, and our calls are answered by attorneys.
This content was written on behalf of Greg Prosmushkin.