If you are looking for a fresh start after accumulating more debt than you can handle, filing for Chapter 7 bankruptcy relief can help to get you the second chance you are looking for. However, before you actually file paperwork with the court, you should know what to expect from this process and how choosing to hire a bankruptcy attorney can help.
Qualifying For Relief
The first step in the process is to ensure that you qualify for Chapter 7 bankruptcy relief. The way this is done is through what is known as a means test. If you file directly with the court, you will need to cover all court filing fees prior to learning whether or not you actually qualify for relief. If you choose to consult a bankruptcy attorney, on the other hand, they will be able to complete this test for you and let you know ahead of time whether or not you will qualify.
When undergoing a means test, the first thing the court will do is to compare your annual income to the average annual income in your state. In order to move on through this process, your income must be less than the state average. Next, the court will determine how much disposable income you have. This is done by comparing your income to your current financial obligations. Any money that is left over after paying your obligations is considered disposable income. If you have a considerable amount of disposable income, the court will determine that you are capable of paying off your debts. However, if your disposable income falls below the average, you may qualify for Chapter 7 bankruptcy relief.
Discharging Your Debts
Once it has been determined that you do, in fact, qualify for Chapter 7 bankruptcy, it will be time to petition the court for the discharge of your debts. During this step, there are a few important things to remember. The first is that you can only discharge debts that are unsecured. Second, you can only discharge debts that are past due at the time your petition is filed. Third, you can only discharge debts that are accumulated prior to petitioning the court.
With these facts in mind, you will need to evaluate whether or not Chapter 7 bankruptcy relief is well suited to the particular types of debts that you have. If you do not have a significant amount of debts that can be discharged as part of this process, you may wish to consider other debt-relief options instead. This is yet another area in which hiring a bankruptcy attorney can be quite helpful since they will be able to help you to effectively identify all of your debts, determine which of these debts qualify for discharge, and help you to decide if moving forward with your petition is in your best financial interest. Reach out to a bankruptcy attorney near you to learn more.