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In these tough economic times, many are considering bankruptcy to help them eliminate debt and get a new start. The following are some frequently asked questions about Chapter 7 bankruptcy:
Q: I’ve heard that I have to pass a “Means Test” in order to qualify for a Chapter 7 bankruptcy. What is this test?
A: In order to pass the Means Test, your household income must fall below the state median income for a household of your size. “Income” can come from any source. If your household income is less than the state median income, you pass the test and qualify for a Chapter 7. If your household income is more than the state median income, than an extensive financial analysis will need to be conducted in order to determine if you can still qualify for a Chapter 7 bankruptcy.
Q: I have medical bills that I just can’t pay. Will Chapter 7 bankruptcy help me with this?
A: Yes. Chapter 7 can eliminate your obligation to pay medical bills.
Q: I am behind on my credit card payments, and my friend is a co-signer on the card. Will the bankruptcy affect them?
A: Yes, your friend will need to be named a debtor in the bankruptcy as well.
Q: There is a judgment that I have against me, or may have against me very soon. Can I file for bankruptcy to prevent from having to pay the judgment?
A: Yes, but not for suits that involve fraud.
Q: Can I get a discharge for having to pay taxes?
A: Usually, you can’t discharge taxes that are owed to the United States or any state, county, or other governmental entity. Income taxes, however, can be discharged if certain criteria is met.
Q: When I file for Chapter 7 bankruptcy, will I lose my home?
A: It depends on the specific facts of your case.
Q: I have several credit card debts, but would like to declare bankruptcy on only a few of the cards. Can I do this?
A: No. When filing for bankruptcy, you must list every single one of your debtors. The bankruptcy trustee does not want to see you “playing favorites.” They think that if you are able to pay one debt, then you shouldn’t favor one creditor over the other.
Q: If I file for bankruptcy today, how long will it take to receive a discharge of my debts?
A: If you file today, it will take approximately one month to receive a date for the trustee meeting. This is a hearing in front of the trustee and where your creditors can come and contest your bankruptcy filing. After the hearing, it takes approximately four to five additional months to receive a decision from the trustee as to whether he or she has decided to discharge your debts.
Q: Can filing for bankruptcy stop a foreclosure sale of my home?
A: Yes, but possibly only temporarily. Once a bankruptcy petition is filed, an "automatic stay" is created, whereby a foreclosure sale must stop. However, the creditor can ask for the court to lift the automatic stay, which would give permission for the creditor to go forth with the sale.
If you are current on your house payment and remain so, and have not modified your loan, you will be able to keep your house. If you are involved in a loan modification, making trial modification payments, are delinquent on your loan payments on your first, your second or even on a HELOC (home equity line of credit), or you are facing a foreclosure, it is important that you consult with an attorney familiar with bankruptcy, foreclosure laws and current loan modifications programs. The Law Office of Mona Parsa is affiliated with skilled attorneys who have the knowledge and experience necessary in these areas to evaluate your specific situation.
[This information does not constitute legal advice, does not constitute any promise or guarantee, and should not be used as a substitute for consultation with a professional attorney.]
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