Are you considering bankruptcy? Filing for bankruptcy can be your best bet for a financial fresh start. Do you receive Social Security payments? If so, you need to know if your social security payments will influence your bankruptcy. So, what should you do first?
Meet with an Attorney
Most bankruptcy attorneys offer free consultations. Our office is no exception. At your free consultation, you will speak with a qualified bankruptcy attorney about your current situation. The attorney will be able to determine if you will pass the bankruptcy means test to ensure that you can go through the bankruptcy process. It also ensures that higher-income earners do not use a Chapter 7 as they have the means to pay more of their debts back.
Means Test
This test determines the chapter of bankruptcy under which you can file. The amount to qualify will vary by state and uses your income, expenses, and household size to determine if you are able to file under a Chapter 7. Many people favor a Chapter 7 bankruptcy, as it will forgive most of your unsecured debts, but this may not be the best option for you. It is important that you speak with a bankruptcy attorney to discuss your current financial situation and review what options will work best for you.
What Information is Used?
To determine whether you can file and under which chapter you will qualify, your attorney will need at least six months of your income from all sources. You will also need detailed information about your expenses over the past six months. If your disposable income is considered greater than your state’s median income, you will likely be expected to use your disposable income to repay your creditors. This does not mean that you are unable to file for bankruptcy.
What If I Don’t Pass?
Not to worry! If a person does not pass the means test, there are other options. One option is filing under a Chapter 13 instead. Under a Chapter 13 plan, you will probably repay a portion of your debt through court-approved and monitored monthly payments. Again, it is important to speak with an experienced bankruptcy attorney. This will show you under which chapter of bankruptcy you should file. After speaking with an attorney, you may find that you are able to pass the means test after all.
How Does Social Security Income Fit In?
Social Security income is excluded from the calculation of income for the means test. However, you still need to include that you receive social security income in your disclosure of monthly income and expenses. You may need to file under Chapter 13, if there is too much money left at the end of the month. Speak with your attorney to find the best option for your situation.
Need More Information?
At the Law Office of Daniela Romero, we believe in relationships that are based on trust. Before we work together, we would like you to get to know us. We want you to be sure that we are the perfect fit for you. This will allow you to be completely comfortable sharing intimate and difficult details of your case, so we can offer you representation to the fullest extent of the law. Call us today to set up a free consultation.