Individual Bankruptcy For Below-Median Income Households
Chapter 7 bankruptcy is one of the two types of individual bankruptcy that you can file for to relieve and eventually discharge unsecured debts. Unsecured debts are debts where a lender does not have any collateral being held to protect themselves in the event that a loan is not repaid.
How To Qualify For Chapter 7
Before jumping into any type of bankruptcy, it’s imperative that you have an understanding of how each functions, who they’re designed for and the timeframe you’ll be dealing with. As we mentioned above, Chapter 7 bankruptcy is one of the forms of individual bankruptcy that’s intended for people who are making less than the median income for where they live – but what does this mean?
Simply put, the government uses demographic data to determine median household incomes for different areas – anything from regions of the country to individual states. This median income is then used to determine whether or not you qualify for Chapter 7 bankruptcy.
To qualify, you must make less than the median household income. If you do, then you’re ready to begin the Chapter 7 bankruptcy process. However, if you make more than the median income for your area, you’ll need to file for Chapter 13 bankruptcy.
Now, if you qualify for Chapter 7 bankruptcy, you need to understand that in this form of bankruptcy, you will be forfeiting your nonexempt property to be seized by the bankruptcy trustee on your case. Once seized, the property will be liquidated and redistributed amongst lenders to pay off most, if not all, of your unsecured debts.
While this may not seem ideal, it pays off – and quickly too! Once this is complete, any remaining debts covered by your bankruptcy case will be discharged and you can start fresh.
How Chapter 7 Bankruptcy Works
Once you’ve determined that Chapter 7 bankruptcy is right for you, the process can begin. For a deeper understanding of the process, we recommend contacting our attorneys at The Cook Law Firm today. However, we’re going to do everything in our power to provide a brief but comprehensive description of how the Chapter 7 bankruptcy process works.
All in all, this process will take anywhere from four to six months, depending on your personal situation. That said, in some situations, when filing for bankruptcy, you may be directed towards an alternative debt relief solution entirely.
Essentially, before the bankruptcy process officially starts, you’ll be required to undergo debt counseling. This serves as a final assessment of your finances to ensure that there are not any other potential options you could use to fix your finances. If a clear solution is available, you’ll be instructed to do that rather than bankruptcy. But, if it’s determined that bankruptcy is favorable for all parties, the process will move forward.
Now you’re tasked with filing a variety of legal documents with the bankruptcy court. These documents are vital to building your case, meaning that it’s absolutely essential that they’re completed correctly and effectively in addition to being properly filed.
Then, after the paperwork is filed and proceedings are scheduled, you’ll meet with a bankruptcy trustee to examine your nonexempt assets and distribute them to pay your debts in accordance with bankruptcy codes. Once this is done, there is a 60-day period for any objections to your case to be filed.
Considering no objections are filed (or approved) in the 60-day period, you’ve reached the end of the bankruptcy process! Or at least you’re almost there. At this point, you’ll undergo a helpful credit reconstruction course and have any remaining debts discharged. You can expect an official notice in the mail one to two months after this date!
We can’t this stress enough that when it comes to bankruptcy: while it’s a fantastic resource that can truly help you, it’s something that needs to be done correctly the first time. This is not to say that you can’t file for bankruptcy by yourself. Rather, we’re saying that it’s going to serve you much better to have an experienced professional who’s an expert in Louisiana bankruptcy. We won’t just be helping you take care of paperwork or providing advice, but also representing your interests throughout the course of a stressful, intensive process.
If you have any questions about Chapter 7 bankruptcy or would like to recruit our help, reach out to us today by calling 318-752-3733. We’ll get back to you shortly and provide you with friendly, easy-to-understand services.