Household income has a broad definition in determining what type of bankruptcy you qualify for. The bankruptcy means test looks at traditional income you receive from an employer through paychecks. This will include any bonuses and overtime that you receive. If you are married, it will also include any income earned by your spouse, even if they do not plan to file a bankruptcy.
With the means test, even one-off sources of income, such as lottery or gambling winnings will count towards your total income. The means test will NOT include Social Security or VA benefits as income. But, it is safe to assume that almost any other source of income will count. This includes alimony or child support, self-employment, or even household income contributions from friends or family members. It will also include pension and retirement income.
In addition to the means test, you must also submit a schedule I in any bankruptcy petition. This schedule must show all types of income, including Social Security and VA benefits, in addition to everything else mentioned above. If you want to file a chapter 7 bankruptcy, you will not be able to show any money left over in your monthly budget. So, it will be important to show almost every expense that you can.
While the means test looks back at the six months before filing, Schedule I looks at your actual current income. Both forms will be considered in determining whether or not you can file chapter 7 bankruptcy. Be prepared to be able to show your income in both scenarios to your bankruptcy attorney.
If you have questions about whether or not you will qualify for chapter 7 or chapter 13 bankruptcy, feel free to set up a free consultation to discuss your situation. Call us at 412-414-9366 to set up an appointment.
Determining if your income and expenses will allow you to file bankruptcy can oftentimes be very confusing and frustrating. I’ve been filing cases for over 10 years, and would be happy to discuss your situation given all my experience with filing hundreds of bankruptcy cases.
Happy Holidays
The holiday season is a great time to relax, sit back, and spend time with your family. However, it is unfortunately also a time of great stress for many people. Financial stress around the holidays and at the beginning of the new year is not uncommon.
As a bankruptcy attorney, my busiest time of year is in the Spring. There are probably several reasons for this. First, no one wants to file bankruptcy around the holidays, which is completely understandable. It is often something that is pushed back until after the holiday season has passed.
The second reason is that many creditors and financial institutions tend to file more lawsuits against my clients during the Spring. Personally, I believe they do this because they know that individuals have tax refunds available at this time. Whatever the reason, there is often a big spike in people needing to file bankruptcy in the Spring.
At this time of year, I would certainly recommend everyone to take a breath and enjoying some time with friends or family. Or even just alone. But, if stress boils over about your finances into the new year, feel free to give me a call at 412-414-9366. The new year is a time for fresh starts. I have literally filed hundreds upon hundreds of cases, and a general sense of relief amongst my clients is nearly universal. Enjoy your holidays. Most financial problems can be fixed with a little bit of guidance and should not ruin your holiday with stress..
Personal Collections and Bankruptcy
Personal collections of collectibles can be protected under the bankruptcy code. However, the value of those items will be important in determining how protected they will be. In most cases, you will be able to keep your stuff.
All assets must be listed when filing a bankruptcy. This includes obvious things such as homes, cars, investment accounts, cash, and electronics and furniture. These items are then exempted from your creditors, using either the federal or state exemption (in most cases filed in Pennsylvania the federal exemptions will be used).
There are specific exemptions for things such as jewelry, real estate, cars, and tools of the trade. But what about personal collectibles? This may include things such as art, antiques, comic books, baseball cards, sneakers, coins, or any other number of collectible items. In most cases, the wild card exemption of the federal exemptions will be used to protect these items from your creditors. For something like sneakers, the exemption for household goods may be allowed, as this includes wearing apparel and shoes.
What values will be listed when trying to exempt these items? The value will be what the items would sell for if they were sold through normal markets, such as eBay or other consignment options. Not what you paid for them originally. In most cases, the United States trustees office is not interested in selling these items unless a significant and easy profit can be made to be used to pay your creditors. The United States trustees office will not want to set up a stand at a comic book convention to sell your old comics. If you have a massive collection of anything that could easily be sold in bulk, they may become interested. But once again, we only need to use the exemption amount for what they would get if the items were sold, given all of the circumstances that make it difficult to sell such items.
In the vast majority of cases, the United States trustees office will not be interested. However, this does not mean that you do not have to list these items or disclose them. As your bankruptcy attorney, I will help you determine whether or not losing personal collections or collectibles would be a realistic possibility. We will try to fit them under the various exemption schemes. If you have questions about bankruptcy or protecting your assets, call us at 412-414-9366 set up a free consultation to discuss your situation. It would be happy to answer your questions and explain the process.
Secured vs. Unsecured Debt
Secured debt has a special status in bankruptcy. The first question most people have is “what is secured debt?” Put simply, it is any debt that is secured by property. The most common examples are homes and cars. The debt that underlies these assets is secured by the property. That is, if you don’t pay your mortgage or car payment, the mortgage company or finance company can take back the security to offset their loss.
Unsecured debt is generally represented in credit cards and personal loans. If you do not pay your credit card or personal loan, the finance companies can sue you and potentially go after things such as bank accounts, but they cannot go after whatever you purchased with the credit card or the loan. Those items were not secured by the loan.
With this background, what are issues with secured debt as opposed to unsecured debt? The biggest thing is that if you want to keep any of your property that is secured by a loan, you have to pay it or continue to pay it through bankruptcy. I often tell potential clients, “there is no such thing as a free car in bankruptcy.” This means if you don’t pay the car loan, you can’t keep the car. In bankruptcy or outside of bankruptcy if you don’t pay a secure debt, you lose the asset.
Credit cards, on the other hand, no matter what you purchased with the credit card you do not have to lose it if it was unsecured. So, if you are behind on a car loan and you are considering chapter 7 bankruptcy, you have to get the car loan current or you will lose the car. In a chapter 13 bankruptcy, you would have the opportunity to catch up the arrears over the course of the bankruptcy plan and keep the car. But, once again, only paying the secure debt allows you to keep the asset.
Contact us at 412-414-9366 if you have secured debt issues that you want to discuss, or if you were not sure whether your debt is secured or not. This may require you to get the original contract paperwork for me to review. I would be happy to discuss your situation and answer your questions.
Chapter 7 Bankruptcy 8 Year Filing Limit
You must wait eight years between filing Chapter 7 bankruptcies. This prohibition limiting filing can cause many complications for individuals facing debt multiple times in their lives.
No one wants to file Chapter 7 bankruptcy multiple times. However, circumstances of life will sometimes dictate the need to do so. Unfortunately, the prohibition against filing in less than eight years is ironclad. If you are unable to file because you have already filed within the last eight years, there are several strategies that you can pursue.
First, you will normally be able to file a Chapter 13 bankruptcy in less than eight years. This would require you to repay at least a nominal amount of debt to your creditors. In some cases, Chapter 13 bankruptcy may be the only bankruptcy that you qualify for even when the eight years expires. If your income has gone up, or you have acquired equity in a home or other property, Chapter 13 bankruptcy may be the only option. There may be no reason to wait.
A second option may be to reach out to your individual creditors and negotiate individual payments in lieu of bankruptcy. After the fact, if you cannot maintain these payments, you may be able to file a Chapter 7 bankruptcy at a later date. The payments to creditors may be able to buy you time until you can file at the later date.
A third option you may need to discuss with your bankruptcy attorney is whether or not to just simply ignore your creditors until you qualify again. Creditors have a wide range of actions they can take against you, including suing you and putting liens on your property. In some circumstances this may be a manageable problem. Creditors have a wide range of actions they can take against you, including suing you and putting liens on your property. In some circumstances this may be a manageable problem with the guidance of an experienced attorney. Reaching out to an experienced bankruptcy attorney may help you navigate this waiting period.
Call us at 412-414-9366 to discuss your situation and see if bankruptcy is an option, or will be an option down the line. I will be happy to discuss your situation and answer your questions.