Ah, to be young. This familiar refrain speaks to the mysticism associated with America’s youth. What freedom they have!
Freedom: yes. Financial security: no.
Today’s young adults have been deemed Generation Broke. They comprise a group of individuals stuck in a struggling economy and faced with a wealth of expenses at once.
Student loans, car payments, home purchases—the payments add up fast. It’s easy to get in over your head and wind up with a bundle of debt. The same is true of small businesses. In their youth, they too are faced with a lot of bills all at once and often sink into debt in order to remain afloat.
Though it may be tempting to put off dealing with your debt until, say, the economy turns around or your sales increase next season, it is essential to take action now. If not relieved, this debt can severely impact your future financial security. Filing for Chapter 7 bankruptcy will ensure it does not.
What is Chapter 7 Bankruptcy?
Chapter 7 bankruptcy is a debt-forgiveness bankruptcy. It is available to all persons—individuals, partnerships, and corporations. Under Chapter 7 bankruptcy, the court takes all non-exempt assets of the filer (cars, homes, jewelry, and anything else of value) and sells them to relieve the debt.
If you’re in need of a complete financial fresh start, Chapter 7 bankruptcy is the way to go. The process of debt forgiveness under Chapter 7 bankruptcy is immediate and comprehensive. Once you file and your request is accepted, nearly all of your debts, including medical bills and credit card charges, will be relieved.
Who is Eligible?
Chapter 7 bankruptcy is open to businesses and individuals alike. Filers can do so individually or jointly with a spouse. In order to be considered for Chapter 7 bankruptcy, your average monthly income (as measured over the past 6 months) must be less than or equal to the median.
If your income is higher than this amount, you may still be eligible to file. The only barrier is the Means Test. This test determines whether or not you have the disposable income to pay back your creditors. If not, you are eligible to file.
To determine your likelihood of passing this test, use this free online calculator.
Who Might Not Be Eligible?
If you have received a discharge from your debts from another Chapter 7 bankruptcy claim within the past 8 years or a Chapter 13 bankruptcy claim within the past 6 years, you will likely be ineligible to file.
You may also need to pursue other options if, within the past 180 days, you requested dismissal from a chapter 7 or chapter 13 bankruptcy case after the creditor requested relief from an automatic stay, or a bankruptcy petition was declined to you because you failed to comply with the orders of the court.
If Chapter 7 bankruptcy isn’t a fit for you, or if you are ineligible to file, don’t despair. There are other paths toward relieving your debt. Depending upon your situation, Chapter 11, 12, or 13 bankruptcies may be a better option.
The Fitzgerald Law Firm can you determine which type of bankruptcy best suits your needs. Contact us and we’ll help you file as quickly as possible, so you can free yourself from the burden of your debt and secure a healthy financial future for yourself or your business.
Photo courtesy of 401(K) 2012