If you’re unable to stay current on your bills and want a chance to get out of debt, you should consider filing for bankruptcy. In particular, you should find out if you’re eligible to file for Chapter 7 bankruptcy, in which a trustee sells most of your assets to pay your creditors a portion of what you owe. Once this occurs, you will no longer be in debt and your creditors cannot contact you for payment.
If you’re concerned about being left with nothing after selling your assets to repay creditors, rest assured that many debtors end up with a “no-asset” Chapter 7 bankruptcy case. This means they do not have any non-exempt assets for the trustee to sell in the first place, so they don’t lose any assets during bankruptcy. If this type of bankruptcy case sounds appealing, consider how to qualify and which assets are non-exempt.
Are You Eligible for Chapter 7 Bankruptcy?
To qualify for Chapter 7 bankruptcy, you must pass a means test. The point is to prove that you don’t have enough disposable income to repay your creditors. To pass the means test, your family’s monthly income must be lower than the state’s median income for the same size family. Add up your gross income over the last six months and multiply the total by two. If that amount is under the state’s median income, you qualify to file for Chapter 7 bankruptcy.
If it’s a little higher, you might still be able to qualify by deducting your allowed monthly expenses from your income. This will tell you how much disposable income you have left after paying certain living expenses. If you don’t have much, you might qualify for Chapter 7 bankruptcy. However, if you have enough left to repay your creditors, you might be a good candidate for Chapter 13 bankruptcy, which involves making a payment plan to repay your debts. The lawyers at our law firm can help determine which option you’re eligible for, so contact us to get started.
Which Assets Are Exempt?
If you qualify to file for Chapter 7 bankruptcy, you’re likely wondering which assets you must sell and which you can keep. The good news is that most or even all of your property will be considered exempt, which means you can keep it rather than give it to your trustee to sell.
The reason for exemptions is to ensure that people can keep the assets they need to get a fresh start financially. Leaving someone without a home to live in or a vehicle to get to work would not allow them to move on with life after bankruptcy, so they’re permitted to keep necessities.
In particular, most states have exemptions for certain assets if their value is below the maximum amount. For instance, you can keep your home or car as long as the equity you have is below the exempted amount. Aside from the motor vehicle and homestead exemptions, you’ll also benefit from exemptions for up to a certain amount of personal property, retirement accounts, government benefits, life insurance, and tools you need for work. Anything beyond that, such as a vacation home or expensive jewelry collection, will be non-exempt and sold to repay creditors.
Are You Ready to Talk to Chapter 7 Bankruptcy Lawyers?
If you’ve been dreading filing for bankruptcy because you’re worried about losing your assets, the possibility of a “no-asset” Chapter 7 bankruptcy case should put your mind at ease. As long as all your assets fall into the exempt category, you can keep them while getting rid of debt. But it’s not always clear whether you’ll have a “no-asset” case or need to sell some of your property.
That’s why you should talk to skilled South Carolina bankruptcy lawyers before making a decision. At The Howze Law Firm LLC, we have helped countless clients through bankruptcy, so we’d be happy to review your financial details to determine if you qualify for Chapter 7. If you do, we will let you know which assets you can keep due to exemptions so you go into your case knowing that you won’t lose your most prized possessions. Call our Rock Hill law firm at 803-266-1812 for an initial consultation with caring bankruptcy attorneys.