Many people are feeling the downtrodden economy and are looking for financial solutions. When the unemployment rate goes up, so does the bankruptcies rate. There a two chapters in bankruptcy that a person may choose to file. The first and most common is a chapter 7, while the second is a chapter 13. There are other chapters within the bankruptcy court, but these two are for individuals who don’t own a business.
The most popular chapter to file is a 7. This is what is known as a total liquidation. A person who filed a Chapter 7 is declaring to the court that they do not have the ability to repay their debts. Rather, they are asking the court for relief from their debts and to have the courts wipe the slate clean. To be able to file a Chapter 7 is tricky, as some will not qualify for this chapter. To see if a person qualifies for this chapter, the attorney will give them a means test.
The means test is designed to see if there is any disposable income. Disposable income is the money that is left over each month after all bills and necessary expenses have been paid. The test is very generous allowing money for entertainment and also savings. If there is little to no money left over at the end of the month, or the family has a deficit, then a Chapter 7 is the best way to go. When a person has the means to repay the debts or portions of them, the person will have to file a Chapter 13.
To file the case a petition is prepared. The voluntary petition gives the court an accurate financial analysis of the person. It allows them to see their debts, income and any assets that are involved. There is a certain amount of assets that are allowable, but it has a specific dollar amount. There are items that are “exempt” during bankruptcy and an automatic stay is placed the minute a petition is filed. This automatic stay will prevent garnishments and account levies and will stop any foreclosure or repossession acts. Be advised, the stay is in effect throughout the case, but someone seeing to get control of a home or car can file what is called a “relief from stay” asking for the court to remove this protection.
Though some try to file their own cases and handle their creditors, it really is a job that is meant for a Chapter 7 Lawyer in Wichita. Lawyers know what the court expects and they can represent their clients in the Meeting of Creditors. Without proper representation, paperwork can be filled out incorrectly and the entire case could be thrown out of court. When bankruptcy is the only option, use a qualified attorney.