For many consumers, getting a fresh start and putting past financial obligations behind them can be achieved by filing for Chapter 7 bankruptcy. Many people get so over their heads in debt that this is the only way to get out. In order to do so, they will need to work on their credit score by taking the right steps. This includes keeping all credit card balances low and paying off bills on time or even before the due date. However, it is important to realize that filing for Chapter 7 bankruptcy won’t just magically repair a credit issue overnight. It can take ten years for a bankruptcy to disappear from a credit report, depending on the exact bankruptcy chapter that was filed by a qualified attorney. Upon successfully completing your Chapter 7 bankruptcy process, our firm is happy to provide credit repair as a service to help expedite the process.

Understanding Your Credit Report

Many people are very surprised at the types of personal data a report contains. To be specific, you can expect to see these three different kinds of information:

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Chapter 7 bankruptcy may be a way to solve your financial problems, but it is not the only way. Chapter 7 bankruptcy liquidates nonexempt property to equitably distribute your wealth to your creditors. If you own a small business or sole proprietorship, you can file under Chapter 11 to liquidate a few nonexempt assets to pay settlement amounts on your delinquent accounts, make extra payments to reduce the principal, or extend the duration of your loans, sales contracts, or leases. Under Chapter 11 or Chapter 13, you can reduce your installment payments by paying for three or five years. You may be able to increase your cash flow by removing encumbrances from your mortgage or your primary business property. If you owe primarily taxes, child support, student loans, or accounts secured by collateral, you can’t discharge or liquidate them. You can file a Chapter 13 repayment plan to repay your secure creditors over three to five years.

Pass the Bankruptcy Means Test

The means test calculates your disposable income. You must pass the test to qualify for liquidation of your nonexempt assets and discharge of your past due accounts. High income does not disqualify you. High income individuals with unusual expenses, such as, high mortgage or car loan payments, delinquent taxes, school loan payments, child support arrears, and medical bills qualify for Chapter 7 bankruptcy.

Official Chapter 7 Means Test calculation

The official Chapter 7 means test calculation form attached to the U.S. Bankruptcy Court website begins with your monthly income adjusted with your spouse's monthly income. It considers the number of exemptions on your federal income tax form, and asks for your specific costs of food, clothing, health care, monthly mortgage or rent, other loans secured by your home, ownership and operating costs of vehicles, taxes (federal, state, local, self-employment, Medicare, and social security), telephone, and other necessary expenses. Your disposable income is your combined monthly income minus the summation of all your living expenses. Lastly, if your disposable monthly income times 60 is less than $7,700, you pass the test. If your disposable monthly income times 60 is more than $12,850, you are presumed to be abusing the Chapter 7 process.
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Facing debts that you cannot afford to pay can be frightening, stressful, and overwhelming. The U.S. Bankruptcy Code offers debt relief for individuals, couples, and businesses. The bankruptcy system is designed to give a debtor the relief from debt he needs to recover from a financial crisis and rebuild his finances without the worry of debt collections. It is also designed to protect some of the equity in a person’s property so that the person has the means to recover and rebuild after completing a bankruptcy case.

There are several chapters of bankruptcy available to individuals, including filing under Chapter 7 of the Bankruptcy Code. Our Long Island bankruptcy lawyers can help you determine if filing bankruptcy under Chapter 7 is your best debt relief option.

Chapter 7 bankruptcy is the most common form of bankruptcy in the United States. It involves the discharge and or liquidation of a debtor's assets in order to settle outstanding debts. However, it can have some negative consequences. Thus, a decision to file should be taken carefully.

If you decide to proceed, hiring bankruptcy attorney to help you navigate the sometimes complicated procedures involved is typically the best forward. With our experienced bankruptcy attorneys, we strive to educate you, as well as make the Chapter 7 bankruptcy process as easy as possible. We will also determine if you are eligible to file at all. If you have had a filing in the previous 6-8 years, then you are barred from doing so.