Are you afraid to open your credit card statement because you are delinquent on several payments and the late fees are piling up? Are you in danger of having your paycheck garnished, or is it being garnished right now? Do you cringe when the phone rings because you know it is a harassing creditor?
At the Law Firm of Kevin D. Judd, our lawyer can provide you with workable options to stop creditor harassment and eliminate your debt. We can help you relieve yourself from overbearing debt and give you a fresh start.
Eliminate Your Debt & Get on the Path to Financial Freedom
Although new bankruptcy laws have made it more difficult to file for Chapter 7 bankruptcy, it is still possible for many people. Our attorney can evaluate your situation to see whether bankruptcy will help you and your family eliminate your debt and stop garnishments.
When you file bankruptcy, you receive an “automatic stay” that prevents creditors from any further collection activity. You will then work with your attorney to differentiate between your dischargeable debts and your non-dischargeable debts. Although non-dischargeable debts cannot be eliminated, eliminating the dischargeable debt reduces your financial burden, allowing you to pay for the non-dischargeable debts.
- Dischargeable debts: Includes credit cards, medical bills, and judgments
- Non-dischargeable debts: Includes student loans, taxes within the previous three years, alimony support payments, child support payments, and criminal restitution
The Bankruptcy Abuse Prevention and Consumer Protection Act added a means test requirement for Chapter 7 bankruptcy. The means test sets an income requirement for Chapter 7 bankruptcy filers. If you have to take the means test, then it will take your income, family size, and expenses into account.
There are two steps to the means test. Only filers who are below the median income for their state have to take the second part of the Means Test. Everyone below this threshold passes automatically.
- Step 1. Check to see if your household income is below the state’s median. If it is below the median, then you passed the means test and may be able to file for Chapter 7 bankruptcy.
- Step 2. Identify your allowable expenses over the past six months. Your rent, groceries, medical bills, and other expenses may factor into the second part of the means test. Any amount left over is your disposable income. Whether it is sufficient to pay off your debts determines whether you pass the means test. It is important to be as thorough as possible during this step.
If a filer does not qualify for Chapter 7 bankruptcy, they may qualify for Chapter 13 bankruptcy. Unlike a Chapter 7 bankruptcy, you pay back your debts through a three-to-five-year repayment plan in a Chapter 13 bankruptcy. At the end of the repayment plan, you receive a discharge on certain debts.
In a Chapter 7 bankruptcy, your nonexempt assets are liquidated to satisfy your debts. Nonexempt assets are assets that you must include in your bankruptcy case. Exempt assets are assets you can exclude from your case. In Maryland, you can use state exemptions if you have lived in the state for two years. Exempt property in Maryland may include tools of the trade for a job, household goods, or certain retirement accounts.
In D.C., you can use either federal or state bankruptcy exemptions. You can choose whichever is most advantageous for your situation. D.C. is known for having an extremely generous homestead exemption, where you can exempt 100% of your current home’s equity. There are also exemptions for household goods, such as furnishings and appliances.
Our attorney can answer any questions you have about D.C. or Maryland bankruptcy exemptions.
Chapter 7 bankruptcies are the most common form of bankruptcy among consumers.
The most common causes for consumer bankruptcy include:
- Large medical expenses or other unexpected expenses
- Over-extended credit
Partnerships, sole proprietorships, and corporations also have Chapter 7 eligibility. However, this form of bankruptcy is less common amongst business entities because, following liquidation, the business must dissolve. Many businesses wishing simply to reorganize debt obligations while continuing operations often file for Chapter 11 bankruptcy instead.
While your level of debt may tempt you to file for bankruptcy, there are negative aspects (such as a decreased credit score and difficulty obtaining loans in the future) that you must consider when making your decision.
A Chapter 7 filing is often appropriate in circumstances where the debtor:
- Earns less than the median income for their geographical region
- Does not have a steady flow of income
- Has very little non-exempt assets
- Owes a large amount of debt that cannot feasibly be repaid within a reasonable period of time
Find out what your options are. Talk to a Washington, D.C. Chapter 7 bankruptcy lawyer at (202) 888-8454. You may also contact us online.