What is the “Means Test” and why is it so important?
The “Means Test” is a mathematical formula designed to identify people filing under chapter 7 who can afford to repay their debts. If your household income is below average, the “Means Test” will not prevent you from receiving a discharge under chapter 7. However, if your household income is above average and the “Means Test” indicates you can pay more than $115 / month towards your general unsecured debt (after taking into consideration payments for your home, car and other essential living expenses), your case may be presumed abusive. Abusive cases are subject to dismissal by the Court unless one can show that special circumstances exist which overcome the presumption of abuse established by the “Means Test.” If the “Means Test” reveals that you have a presumptively abusive case which cannot be overcome by a showing of special circumstances, filing a chapter 13 is the next option to consider.
How does filing bankruptcy affect my credit rating?
Your credit rating is a record of all your past credit performances. The fact that you file a bankruptcy will be reflected on your credit report and will remain there for ten years in contrast to most other negative information remaining on your credit report for seven years.
However, some financial institutions openly solicit business from persons who have recently filed under chapter 7, in part, because of the decreased debt load you have after filing. If there are compelling reasons for filing under chapter 7 that are not within your control (such as an illness or injury), some credit rating agencies may take that into account in rating your credit after filing.
If you file a chapter 13 you are not permitted to incur debt (unless Court permission is granted) for the duration of your plan (3 to 5 years). However, in my experience, most debtors are able to qualify for credit soon after completion of their chapter 13 plan.
What is chapter 7 and how does it work?
Chapter 7 is that part of the federal bankruptcy law that permits you to discharge certain debts by filing a case in the bankruptcy court, turning all of your non-exempt property over to a trustee (while retaining certain items of exempt property), and obeying the orders and rules of the court. A person who files under chapter 7 is called a debtor.
What is chapter 13 and how does it work?
Chapter 13 is that part of the federal bankruptcy law that permits you to repay all or a portion of your debts under the supervision and protection of the bankruptcy court. Under chapter 13, the person filing the case, who is called the debtor, submits a plan for the repayment of all or a portion of his debts to the court. The court must approve the plan for it to become effective. The court prohibits creditors from attempting to collect their claims from the debtor and permits the debtor to make regular payments in the amounts called for in the debtor's plan to the chapter 13 trustee for the period of time specified in the plan. The chapter 13 trustee collects the money paid in by the debtor and disburses it to the creditors as set forth in the debtor's plan. Upon the completion of the payments called for in the plan, the debtor is discharged from any liability for the remainder of his debts.
Why is it a good idea to have a local attorney?
When I first began practicing law, most clients found attorneys either by word of mouth referral or by going to the phone book. In our “digital” age, the phone book is rapidly going the way of the dinosaur. Today, most clients who are not referred to me by a trusted source go to the internet to help them find an attorney. Unfortunately, you can’t always trust what you read online. Flashy websites and promises of never having to leave your house to file a bankruptcy can certainly be appealing, but a fair amount of caution should be exercised. While bankruptcy is a federal law, there are many “local” customs along with trustee and judge preferences that are best known by the attorneys who limit their practice to a specific geographic region. A lawyer out of California, Chicago, or even Dallas does not know the local legal culture of Lubbock. Having an attorney who limits their practice to northwest Texas will likely benefit you in many ways. Additionally, hiring a local attorney gives you the ability to physically come to your attorney’s office and see your attorney in person. Good luck trying to do that with an out of region (or out of state) attorney.
Why is my choice of a bankruptcy attorney so important?
While some bankruptcy cases are fairly routine, others can be very complex and require the assistance of an experienced bankruptcy attorney. An attorney with limited experience may not be able to tell the difference between routine and complex cases until you find yourself knee deep in the “mud” of the case. When making this important decision, you should ask the prospective attorney how many years they have practiced bankruptcy. Also, you should ask how much of their practice is devoted to bankruptcy (you don’t want someone who does not devote the majority of their practice to this field of the law). You should seek out an attorney who is “board certified” in bankruptcy. The mark of board certification gives you a lot of confidence that the attorney is well versed in the law and has substantial experience.
HIBU.US
From a Gregory Sam C Atty customer
