Understanding the complicated rules of filing for bankruptcy can be difficult, which is why many people seek the advice of a professional. Bankruptcy attorney Benjamin Ginter runs the Law Offices of Benjamin J. Ginter in Cranford, New Jersey. Here, he explains why filing for bankruptcy is still an option for many people, despite changing laws.
A lot of people are under the misconception that because the laws have changed they no longer qualify for bankruptcy. That is not true, although some of the main areas have changed. For example, you can now file for Chapter 7 bankruptcy once every eight years – it used to be once every six years but that is no longer the case.
Means Test
You also now will face a means test and need a median income level to file for bankruptcy. Each state has its own guidelines on their median-income level for a family or household of a certain size. Here in New Jersey, for example, if you have a household size of four people, including children, the median income level has been determined to be roughly $103,000.
What that means is if a debtor or a debtor and his spouse (if it is a couple filing) make over $103,000 – and are filing for Chapter 7 bankruptcy – then there is a presumption of abuse. Meaning that based on their combined income, they could afford to file for Chapter 13 bankruptcy, which means they can make regular payments.
However, a lot of people do not make the kind of income that would exceed this level, so they can still file a Chapter 7. However, if someone does exceed that amount, there are deductions that can actually throw them back into a Chapter 7, meaning they will not have to make payments.
Prove Your Expenses
You have to be able to show that you have expenses that preclude you from being able to make the payments that would be required if you were to file for Chapter 13, and prove that you are correct in filing Chapter 7.
Sometimes that is based on what you pay in mortgage payments or whether you have a car that you have to make regular payments on. You can make deductions from this and that could put you in to Chapter 7, even though your income could exceed the median income level.
Filing for bankruptcy can be a difficult procedure but it can be a largely successful one if done correctly. A qualified and experienced bankruptcy attorney who can help you every step of the way is paramount in getting the whole process straight from the very beginning.
