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Chances are, if you’ve found this website, you’re in debt and looking for a way out. Many clients who speak to our Fort Collins bankruptcy attorneys always start their case consultations by asking the question “Am I in enough debt to qualify for bankruptcy?”
If you’re unsure whether you might qualify for bankruptcy, here are some signs to look out for that could indicate whether or not you should seek the services of a bankruptcy attorney.
Answering yes to more than one of those questions means that bankruptcy may be an option for you and that you should seek further advice from an experienced Larimer County bankruptcy lawyer.
Since these questions seem to pop up regularly during our free case evaluations, our Fort Collins debt relief attorneys have designed this website to provide general information on how bankruptcy petitioners in Larimer County can qualify for Chapter 7 or Chapter 13 bankruptcy.
Chapter 7 bankruptcy is the most commonly filed personal bankruptcy chapter in the country because it is widely perceived as the fastest and best way to get out of unmanageable unsecured debt such as credit card bills, medical bills, or a payday loan. Often referred to as “liquidation” or a “straight” bankruptcy because virtually all debt is eliminated in a relatively short amount of time, this debt relief method is reserved for those who truly need it.
Before 2005, that wasn’t always the case. To ensure only the truly needy were allowed to file for Chapter 7 bankruptcy, Congress passed a new law called the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA).
The BAPCPA made qualifying for Chapter 7 bankruptcy more challenging by establishing the means test. You must pass the means test in order to be able to qualify for Chapter 7 bankruptcy, and there are two ways to pass the means test. The first and easiest way is to determine if you earn less than the median household of the same size in Colorado. If you do, then, congratulations, you have passed the means test and you and your Fort Collins bankruptcy attorney can move on with filing the Chapter 7 bankruptcy petition.
If you don’t pass the first step of the means test, then you move on to the second, more complicated step. For the second step, the means test uses a complicated mathematical formula that compares your gross monthly income to your household expenses and from those numbers comes up with what is considered your “disposable income.” Then more complicated math is done to ascertain whether your amount of disposable income is sufficient to cover repaying the debts you owe.
As you can see, calculating eligibility to file for chapter 7 bankruptcy is not straightforward, or easy. Formulas for the calculations are complicated and online calculators often yield incorrect results. The means test computations should be completed with a Fort Collins bankruptcy attorney who understands the fine details of calculating income and has access to accurate figures about the medians in the state.
We should also point out that even if you qualify for Chapter 7 bankruptcy via the means test, there is still another qualification you must meet before you can file for Chapter 7 bankruptcy in Colorado. 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. Thanks to the BAPCPA, 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.
To further discuss Chapter 7 qualifications, or the means test, contact our Fort Collins Chapter 7 bankruptcy lawyers for a free case consultation.
If you don’t qualify for chapter 7 bankruptcy, chapter 13 is still a viable option.
As a matter of fact, Chapter 13 is the better bankruptcy option for any Fort Collins residents who
Unfortunately, just because you have a job and don’t qualify for Chapter 7 bankruptcy, doesn’t automatically mean you’ll qualify to file for Chapter 13 bankruptcy (although that’s usually the case). Some requirements for eligibility include–
1. The amount of debt you have- You won’t qualify for Chapter 13 bankruptcy if your secured and unsecured debts exceed certain amounts. If your debts are too high for you to be able to afford to pay them back over 3 to 5 years, other debt-relief options, such as Chapter 7 bankruptcy, may be better for you.
2. Your income- A steady source of reliable income is necessary for any Chapter 13 bankruptcy petitioner. You must be able to prove to the court that you can pay regular household expenses, as well as current secured loan payments (such as a mortgage or car loan), and the repayment plan payments.
3. Your tax status- To file for Chapter 13, you will have to submit proof that you filed your federal and state income tax returns for the four tax years before your bankruptcy filing date. So if you haven’t filed taxes for the last few years, you won’t be able to file for Chapter 13 bankruptcy.
During Chapter 13 bankruptcy, also known as a “wage-earners bankruptcy” or a “reorganization bankruptcy,”, you and your Fort Collins Chapter 13 bankruptcy attorney will work together to calculate a debt repayment plan that is then submitted for approval to the Federal Bankruptcy Court. Once your payment plan is approved, you will continue to make monthly payments over the course of three to five years. At the end of your repayment plan, any remaining unsecured debt will be discharged.
Crafting a repayment plan that is both accurate and achievable requires the help of an experienced Larimer County area Chapter 13 bankruptcy lawyer and should not be attempted without the aid of a qualified attorney. If you’d like to speak to an experienced legal professional about Chapter 13 bankruptcy qualifications, please contact our firm for more information.
The helpful and experienced Fort Collins bankruptcy attorneys at our firm have dedicated their careers to helping individuals find debt relief through Chapter 7 and Chapter 13 bankruptcy.
Our team of helpful legal professionals have over 50 combined years of experience with Colorado bankruptcy law, and favor a straightforward approach to helping clients with debt relief, by providing you with the options that will suit your situation best and letting you make the ultimate decision for your financial future.
You don’t have to let unmanageable debt rule your life. Contact us today to discuss your case in a free consultation with our Larimer County debt relief lawyers.