I have been helping clients file for consumer bankruptcy protection since 1989. The bankruptcy landscape has changed drastically since then. The Bankruptcy Abuse Prevention and Consumer Protection Act became effective October 17, 2005. It made many significant changes to the existing Bankruptcy Code. Staying up to date on the law and local practice in this area is crucial to effective representation.
I am a member of the National Association of Consumer Bankruptcy Attorneys (NACBA) and attend many Continuing Legal Education seminars in this ever changing landscape. I also belong to the Delaware State Bar Association, Bankruptcy Section and regularly review Court decisions from across the United States to help keep abreast of breaking bankruptcy case law.
I know that this is one of the most stressful times in your life as you contemplate this difficult decision. We do our best to ease your mind and to minimize the anxiety and fear that you may be experiencing.
Basic Bankruptcy Concepts
There are four (4) types of bankruptcy an individual can file; Chapters 7, 11, 12 or 13. The two most often applicable to individuals and small businesses are Chapters 7 and 13. Generally, in a Chapter 7 Bankruptcy you do not repay your dischargeable unsecured debts, e.g. credit cards, medical bills, and/or pay day loans. Generally, in a Chapter 13 Bankruptcy you might repay a percentage of your unsecured debts over a three to five year period. One common bankruptcy misconception is that you lose your home and other significant assets in a Chapter 7 bankruptcy. For the most part, as long as you are current on your mortgage and car payments, you may retain those assets by continuing to make your regular monthly payments.
Chapter 7 Eligibility
Qualifying for a Chapter 7 Bankruptcy is not automatic. You must pass the Median Income Test. If your income exceeds the Median Income, you must also pass the Means Test, the Disposable Income Test and the Best Interest Of Creditors Test. If you do not qualify for a Chapter 7 Bankruptcy you may file be able to file a Chapter 13 Bankruptcy. These tests are explained in detail during your FREE CONSULTATION.
Under Delaware law, there are limits on the value of assets that you may keep in a Chapter 7 bankruptcy. You may retain your residential real property or mobile home so long as your equity does not exceed $100,000.00. You may retain your personal property so long as your equity does not exceed $25,000 per debtor, $50,000.00 in a joint case filed by a husband and wife. However, there are specific exceptions to this rule. The manner in which you calculate the “equity” is also very fact intensive and you should consult a bankruptcy attorney for exact answers.
Generally, you may retain your ERISA qualified retirement account, e.g. 401K, IRA, defined pension plan, etc.… with no monetary limitations.
Chapter 13 Eligibility
Qualifying for a Chapter 13 Bankruptcy is not automatic. You must owe less than $1,010,650.00 in noncontingent, liquidated secured debt and $336,900 in noncontingent, liquidated unsecured debt. Also, you must have sufficient income to fund your required monthly payments under the Chapter 13 Plan.
There are many more requirements, rules and issues concerning Bankruptcy. The above information is intended solely to provide you with a brief understanding of Bankruptcy law and does not constitute legal advice.
We look forward to answering your bankruptcy questions during your FREE CONSULTATION.
The Eaby Firm LLCWe are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.