Filing Under Chapter 7: More Difficult To Qualify?

Contemplating bankruptcy? But worried about qualifying under Chapter 7, because you’ve heard the new bankruptcy law, passed in October 2005, severely restricted Chapter 7 filings? Don’t worry. Chapter 7 does have new requirements. But, as every experienced Washington Bankruptcy Attorney will confirm, it’s still available for the vast majority of filers. Chapter 7 versus Chapter 13 nAs every Washington bankruptcy attorney knows, Chapter 7 is better for many filers because it wipes out many unsecured debts and doesn’t affect a debtor’s future income. Under Chapter 13, some debt must be repaid out of this income. (A Washington bankruptcy attorney can explain the differences in more depth.) More Paperwork Required nThe new law requires more Chapter 7 paperwork. This paperwork is a good reason to hire a Washington Bankruptcy Attorney. Your Washington bankruptcy attorney will make sure the paperwork is timely filed, so your case doesn’t get dismissed. Two More Chapter 7 Hoops to Qualify n• You must take an approved credit counseling course within six months before filing. Your Washington Bankruptcy Attorney can arrange for this. n• Before your debts are discharged, you must take an approved financial management course. Again, your Washington bankruptcy attorney can arrange for this. Means Test nIt was this test that prompted all the doom and gloom about Chapter 7 filings. Your Washington Bankruptcy Attorney can apply the test for you. The starting point is a comparison between your income and our state’s median income. An example: you’re a family’s sole wager earner. Washington’s one-earner median income (as of October 2007) is $42,452. If your income is less that the median, Chapter 7 is an option. If it’s more, additional calculations are needed to determine eligibility. A Washington bankruptcy attorney can advise you on all this. Any Washington bankruptcy attorney will tell you the impact of the means test was hugely overblown. And the experience of that Washington Bankruptcy Attorney surely reflects this conclusion from a government report (CRS Report for Congress Order Code RS22058, Updated April 21, 2005.) “…it seems safe to say that the new law will not bring about a dramatic decline in the proportion of bankruptcy cases filed under Chapter 7.” n