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Filing for bankruptcy is a difficult decision to make. Loss of employment, divorce, illness, medical bills, and financial management issues are just a few reasons that cause good people to become overwhelmed by debt. Generally, people who find themselves deep in debt get trapped in an endless cycle of stress and pressure from debt collectors.
If this sounds like you, our Colorado Springs bankruptcy attorneys are here to tell you that you don’t have to stay trapped, there is a way out. Bankruptcy is an option provided by the Federal government to give people a chance at a financial fresh start.
However, in order to file for bankruptcy, you must meet certain criteria under the federal bankruptcy code. These criteria have to do with your level of income, your level of debt, and the type of debt you owe. If you’re unsure if you qualify to file for bankruptcy in El Paso County, you’ve come to the right place.
Before filing bankruptcy it is highly suggested that you speak with a qualified Colorado Springs bankruptcy attorney. You may think that you don’t qualify for Chapter 7 bankruptcy when you actually do, or there may be better options for your particular situation.
If you’re considering bankruptcy, you undoubtedly have questions. Contact us today and start getting answers.
Chapter 7 bankruptcy is a powerful tool that allows filing parties to move forward toward financial freedom without fully paying their existing financial obligations. It is often referred to as “liquidation” or a “straight” bankruptcy because virtually all debt is eliminated in a relatively short amount of time. Accordingly, this debt relief method is reserved for those who truly need it.
In 2005, Congress passed a new law called the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA). Before the BAPCPA was passed, you could file for bankruptcy under Chapter 7 regardless of your income level; rich or poor Chapter 7 was a safety net for anyone seeking debt relief through bankruptcy. While the legislation did create a financial means test that limits the eligibility of some who would previously have qualified for a Chapter 7 discharge, there is no truth to the premise that people need to be close to the poverty level to qualify for Chapter 7.
Now, in order to file for bankruptcy you need to take a means test that will determine your assets and income versus your ability to pay your debts. That means that in order to be able to file for bankruptcy in Colorado Springs you must meet all of the conditions, including passing the means test.
There are two ways to pass the means test:
2.If your income is over the Colorado median income for a household your size then you must complete the means test by calculating your income and expense information. This portion of the means test allows you to deduct allowable monthly expenses from your current monthly income to calculate your disposable income. The expenses used are a combination of national and Colorado expenses, and disposable income is the income available after expenses that may be used to repay your debts. If your disposable income is below a specific amount, you may still qualify for Chapter 7 bankruptcy
Even if your income exceeds the median income based on the number of people in your family, you may still qualify for Chapter 7 if you do not have enough disposable income to make a significant monthly payment to your credit card debts and other forms of standard unsecured debts. A debtor’s disposable income is evaluated after allowing for several deductions from your gross income, which include the following:
Another deciding factor (beyond the means test) on whether or not you can file for Chapter 7 bankruptcy in Colorado Springs is whether or not you’ve filed for bankruptcy before. If you have previously filed a personal bankruptcy case (either Chapter 7, 11, or 13), and received a discharge, there is a waiting period before you can obtain another discharge. As of 2005, you can now be denied a discharge if you received a discharge in another Chapter 7 or Chapter 11 bankruptcy case filed in the last eight years. And if the previous case filed was chapter 13, at least six years must elapse from the date of filing of the first bankruptcy before a chapter 7 matter can be filed.
For a more in-depth look at Chapter 7 bankruptcy qualifications, head over to Debt.org’s Chapter 7 Bankruptcy page, or contact our experienced Colorado Springs Chapter 7 Bankruptcy attorneys today.
The other form of personal bankruptcy that can be filed in Colorado Springs is Chapter 13. Similar to Chapter 7 cases, there are specific requirements to be eligible to file a Chapter 13 bankruptcy. The foremost eligibility requirement is that you must have regular income to file a Chapter 13, which is why Chapter 13 bankruptcy is commonly referred to as a “wage-earners bankruptcy.”
Another nickname for Chapter 13 bankruptcy is “reorganization bankruptcy.” This is because the primary function of a Chapter 13 bankruptcy is to reorganize all of your debts into one manageable payment, which will be paid out over the course of 3 to 5 years. The amount of your monthly payment will depend on several factors, including your income, the amount of debt you have, what assets you want to keep, and the value of your assets. Just like Chapter 7 bankruptcy, you will be required to provide all of your financial information to your Colorado Springs bankruptcy attorney who will work with you and the court-appointed bankruptcy trustee to work out an affordable payment plan that fits your budget.
If you are thinking about filing for bankruptcy and wondering if you qualify, reaching out to an experienced Colorado Springs debt relief attorney is in your best interest. Our team is filled with experienced legal professionals who will be able to provide you with valuable legal and financial advice that will ultimately help you to make better and more informed decisions regarding your finances. We understand the importance of ensuring that each case receives the unique attention that it requires, and our El Paso County bankruptcy attorneys will go above and beyond to make sure that you are on the right track.
We aim to provide our clients with the highest level of integrity, professionalism, and respect. With more than 50 years of combined experience, our legal team is well versed in bankruptcy law, both on a federal and state level. When you’re ready for a fresh start free of debt, contact our Colorado Springs bankruptcy attorneys for a free case consultation. Let’s work together to wipe your debts out.