Chapter 7 bankruptcy is one effective method for wiping out debts such as credit card debt, medical debt, or payday loan debt. However, the bankruptcy laws have strict eligibility requirements for Chapter 7 that must be met to take advantage of its provisions. Individuals that are not eligible for Chapter 7 filing may wait until they become eligible—if they expect a change in income or expenses—or they may use Chapter 7.
When the Presumption of Abuse Applies
If you make less than your state’s median income based on your household size, you do not have to worry about the means test or the presumption of abuse. You can move on with your Chapter 7 filing and be on your way to a fresh financial start.
For those that do make more than the state median income, you will have to pass the means test. The means test uses certain statutorily allowed expense amounts to determine your net monthly income. If this amount exceeds $12, 850 or 25% of your nonpriority unsecured debt (as long as that amount is at least $7,700), then you case is presumed to be abusive. Basically, you have too much discretionary income to qualify for Chapter 7, unless you can show special circumstances to overcome the presumption of abuse. Our Ontario Office can help you if you have any questions. Find out why we have a great bankruptcy lawyer in riverside
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FILING FOR CHAPTER 7 BANKRUPTCY IS YOUR LEGAL SOLUTION TO A FRESH START
The United States Of America’s Federal Bankruptcy Act was created to protect you when you cannot afford to meet your financial obligations with your creditors. The following are examples of what filing for Bankruptcy protection can do for you.
How to Show Special Circumstances and Overcome the Presumption
You can only overcome the presumption of abuse by describing in detail the special circumstances that should permit you to move forward with a Chapter 7 case. These special circumstances have to be something that shows that you do not actually have as much discretionary income as it seems, due to unavoidable expenses or reductions in income.
Some situations that may support a rebuttal of the presumption of abuse are:
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FILING FOR BANKRUPTCY IS YOUR LEGAL SOLUTION TO A FRESH START
You may need to provide documentation to support your claims and show that there is no reasonable alternative to filing a Chapter 7 bankruptcy. While the means test attempts to estimate your income and expenses, you may have expenses that go beyond the statutorily allowed amounts, or you may have recent changes to your financial situation that make the numbers used in the means test misleading. You will have to show that your real financial situation is not accurately reflected in the means test.
If you have questions of the presumption of abuse in Chapter 7, consult with a bankruptcy attorney.
LG LAW – Workers Compensation, Bankruptcy & Personal Injury Law Firm can help you regain your financial freedom and get a fresh start with a Chapter 7 or Chapter 13 bankruptcy. To schedule your free consultation, call us at 1 888-901-5240 today.