In 2017, just over 489,000 people in the United States filed for Chapter 7 bankruptcy. This number is less than the previous year, in which nearly 510,000 Americans filed for Chapter 7 bankruptcy. While it is good news that the number of bankruptcies are decreasing, the decreasing number doesn't mean that bankruptcy is a bad option for those who are considering doing it.
If you are overwhelmed by debt and do not have the financial means to pay it off, filing Chapter 7 bankruptcy might be in your best interest. To help you make this decision, here are the answers to four frequently asked questions regarding Chapter 7 bankruptcy.
1. Can Anyone File for Chapter 7 Bankruptcy?
The amount of debt you have isn't the only thing that is considered when filing for Chapter 7 bankruptcy. Your income also plays a part, and if it is too high, you might not be able to file for Chapter 7 bankruptcy.
In order to figure out if your income is too high, simply take your monthly income and compare it to your state's median income. According to the most recent numbers, the median income in Alabama is $46,257. If your income exceeds this, you won't be able to file for Chapter 7 bankruptcy. You should also note that, besides your wages, other forms of income include:
Gross income from a business or farm
Interest and dividends
Child support or spousal support
State disability insurance
Besides having an income that is too high, you won't be able to file for Chapter 7 bankruptcy if you can repay some of your debt, you previously had another bankruptcy case that was dismissed, you failed to meet the credit counseling requirement, or you have defrauded any of your creditors.
2. How Do I File for Chapter 7 Bankruptcy?
If you meet all the requirements, the next step is to indicate your intention to file for bankruptcy, which is done at the federal bankruptcy court where you live. When you file your petition, you will need to disclose your debts, along with other financial information.
Before actually filing for bankruptcy, you'll need to complete a course in credit counseling. Once you receive your certificate for completing this course, you'll need to finish your petition, which will include disclosing information about all of your property, creditors, income, assets, and expenses.
Once all of the paperwork has been completed, you'll need to attend a 341 hearing where you will meet with a trustee. Your trustee will ensure all your creditors get paid. Before your debts are officially discharged, you will need to complete a debt management course.
3. How Long Does It Take to File for Bankruptcy?
It usually takes anywhere from 3 to 6 months from the beginning to the very end of the bankruptcy process. This means within six months of filing, you can be absolutely debt free. You should note that after you file for Chapter 7 bankruptcy, it will remain on your credit report for about 10 years.
4. Who Can Help Me File for Bankruptcy?
Filing for bankruptcy can be a complicated process. Many bankruptcy laws vary from state to state, which can make the process all the more daunting. For this reason, many people who file for Chapter 7 bankruptcy do so with the help of a bankruptcy attorney.
An attorney can help you get all of your financial information in order, help you understand the Alabama bankruptcy laws, and help you navigate the entire bankruptcy process. If you need help determining if you qualify for Chapter 7 bankruptcy or you need assistance with the filing process, contact C. Taylor Crockett, P.C. today.