Wednesday, December 7, 2016

Do I Have To Be Current On My Debts To File A Chapter 7?

If you are not able to pay all of your bills, and need help finding a way out of debt, it might be difficult to get current on everything before you are able to put a plan in place. Luckily, there is no requirement that you be current on your debts before you are allowed to file a Chapter 7 bankruptcy. This is good news for those of you that are drowning in debt, and in need of immediate relief from your financial distress. But, just because there is no requirement that your loans be paid current before you file a Chapter 7 bankruptcy case, that does not mean there are not certain other things you need to know about before you start your case.

A Chapter 7 bankruptcy will benefit you in many ways, perhaps the most important of which is that you can eliminate all of your unsecured debt. In order to qualify for a Chapter 7 case, you don’t have to be current on all of your payments, but you do have to meet certain other requirements. Some of these requirements include:

         You must perform the means test calculation, which will examine the amount of income you have in comparison to your secured debt obligations. If the result of this test shows you have even a small amount of disposable income left over each month to put towards your unsecured obligations, you may be required to file a Chapter 13 case instead.
         You have to provide proof of your income, for the “lookback” period, which is essentially a set amount of time prior to the date you file your case. So, if you have just received a large bonus, you might want to ride it out for a while so this income is not included in the means test calculation. This is perfectly acceptable, especially if the bonus is not something you count on receiving regularly. It would be unfair to include money you don’t normally get paid in the means test, and would yield an unreliable result.
         You will have to provide copies of tax returns, as well as titles to your cars and deeds to any real property you own.
Once you have gathered the information and documents needed to file, call our office. We will go over your finances with you and let you know what type of case you can file. We will perform the means test on your behalf, because it is critical to get an accurate result before your case is prepared, and this test can be tricky. If you need to file bankruptcy, call us today.

For more information about how to handle overly burdensome debt, call us today or reach us online at We have multiple locations to serve you and can schedule a time to meet at the office most convenient for you.

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