Our Chapter 7 Bankruptcy Lawyer Provides the Most Affordable Debt Solution for You
You know the feeling of being in debt – and you’re done with it. You know it’s time to get serious about finding a solution that will actually work.
The good news is that solutions exist that benefit you more than you’ve likely ever recognized. There are ways to take care of the situation you’ve ended up in with your creditors, so you can find a better way forward that leaves the past completely behind.
You may have heard about some of the options available to you, but knowing what you’re eligible for might seem confusing, especially if you don’t want to be misled. “Chapter 7” and “Chapter 13” are phrases you’ve probably heard before, and you want to get your head around what makes sense for your situation. After all, you want to end up with the best solution available because you don’t want to be back in this situation again.
The Wink Law Firm can help you determine what form of bankruptcy you’re eligible for, including filing for Chapter 7 bankruptcy. Our Chapter 7 bankruptcy attorney is highly experienced at ensuring you get a solution under the law that fits your circumstances and that will benefit you the most, if you’re ready to make a change.
Chapter 7 Bankruptcy? Chapter 13? Determining Your Eligibility
The Wink Law Firm invites you to schedule a free consultation where we can discuss your debt concerns and look into a resolution.
One of the most important details to understand about debt relief is the difference between Chapter 7 and Chapter 13 bankruptcy. For most, Chapter 7 bankruptcy will be cheaper and faster than Chapter 13 bankruptcy. However, to be eligible for Chapter 7 bankruptcy, the law typically requires you to lack the ability to repay creditors based on income. Although both bankruptcies can discharge your unsecured debt (e.g., medical bills, credit cards, and more) Chapter 13 requires you to complete a three-to-five-year payment plan in order to obtain the discharge. There is no such payment plan in Chapter 7.
We determine your eligibility for Chapter 7 through what is called a “means test.”
- All gross income from your household in the past six months is considered when determining your eligibility, including income from stocks or sources of income outside your regular employment (e.g., contributions from friends and family). And by focusing on gross income, the law is looking at your income before any deductions from your pay for taxes and insurance.
- If your average monthly gross income over a six-month period is below the median income for your household size (the number varies by how many people are in your household) you qualify for Chapter 7 bankruptcy.
- The median income for Colorado residents is determined by the U.S. Department of Justice, and it fluctuates. This past April, the median income changed to $74,274 for a single-person household. The median income figures are adjusted twice annually, in April and November. Our Chapter 7 bankruptcy attorney will provide the most up-to-date threshold for Chapter 7 during your free consultation.
- If you’re above the gross income threshold, you can take what is referred to as the “long-form means test.” This allows you to deduct living expenses, including necessities like groceries and clothing, as well as other payments you’re required to make, such as child support. A bankruptcy attorney can help you complete the long-form means test, which is technical and is best prepared by an experienced attorney like those at The Wink Law Firm. Not all of your expenses are deductible. Some expenses, like those for food and clothing, are limited to the IRS standard for your household size. Other expenses, such as child support and health insurance, are based on what you actually pay. Also, it is possible to plan to optimize the means test for you. For example, you can time the filing of bankruptcy to coincide with a 6-month period prior in which your income is lower. Or you can take on certain allowed expenses such as term life insurance or increased 401K contributions prior to filing bankruptcy.
- If your income minus allowed expenses (so-called ‘disposable income’) is low (i.e., close to or below zero), you are eligible for Chapter 7 despite the fact your gross income is above the median for your household size.
- There is an exemption, too, for those who still find themselves with disposable income, even after deductions are made. You are automatically eligible to file for Chapter 7 bankruptcy if the majority of your debt is so-called non-consumer debt. Non-consumer debt includes personal liability for business debt and tax debt. To qualify, your total non-consumer debt must be greater than the total of your consumer debt. Consumer debt includes the mortgage on your home, as well as car loans, credit card debt, medical bills and student loans.
- It is important to share information about your tax debt, personal guarantees on business debt, student loans, and other non-consumer debt with your Chapter 7 bankruptcy attorney.
The Wink Law Firm’s Chapter 7 bankruptcy lawyers will help you every step of the way to determine the best course of action, including assisting you with gathering all the necessary information to determine your eligibility for Chapter 7 bankruptcy.
How to Determine Whether Debt Settlement or Chapter 7 Bankruptcy Is Your Best Bet
If you are not eligible for Chapter 7 bankruptcy, or you have property that you would lose in Chapter 7 (e.g., home equity in Colorado over $250,000), you should explore Chapter 13 and debt settlement. The amount you have to repay in Chapter 13 depends on your income, assets, and types of debt. At the least, you will have to pay for attorney’s fees and trustee’s fee. This can be very low and tends to happen when your disposable income is low, you don’t have much unprotected property, and you don’t have debts you have to pay in Chapter 13, such as certain income taxes. Chapter 13 can be a great deal, depending on how much of your debt you’d have to repay.
It is important to compare the cost of bankruptcy in either Chapter 7 or 13 to the cost of settling your debt outside of bankruptcy. The Wink Law Firm’s team can potentially help you settle for half of what you owe. Debt settlement makes sense if you can save to pay that lump sum (approximately 50% of your debt) over the course of 24 months. While the amount you have to repay in bankruptcy depends on your ability to repay in most cases (i.e., income or unprotected assets) bankruptcy tends to look better with more debt. Because the amount you have to repay in settlement is a function of your total debt, it tends to look worse with greater debt.
The Wink Law Firm’s Chapter 7 bankruptcy lawyer always ensures that you get the most cost-effective debt solution for your situation, and that starts with what is most affordable and effective for your particular situation. Our job is to customize and individualize a legal strategy that will help you find a debt-free future.
The Wink Law Firm Is Your Committed Partner
Although no one wants to be in a position where they have to consider filing for Chapter 7 bankruptcy, it can be an extremely powerful tool to legally get out of debt. The misunderstandings, circumstances, mistakes, and decisions of the past should not prevent you from putting yourself and your family in the best possible position going forward. For many, that is accomplished by filing bankruptcy. Chapter 7 bankruptcy with an attorney by your side may be exactly what you need to heal.
You won’t have creditors threatening to sue, and you will be eligible for a mortgage and even a 700 credit score within two years of filing when you work with an expert chapter 7 bankruptcy lawyer. The future is bright when you begin to take action. The Wink Law Firm can get you pointed in the right direction.
Schedule a free consultation today with The Wink Law Firm by contacting the team online or calling (303) 410-1720.