It can be confusing trying to determine on your own which bankruptcy chapter you should file. You may feel as if you do have some disposable income that could be used to pay debts, but you just don’t make enough to pay them all.
The fact is that you may be surprised how far in debt you really are. Typically, it is not until a person’s Minneapolis bankruptcy lawyer performs a means test that they find they can’t pay their bills because they are really very far in the red. Yes, there may be some money to go out to eat once in a while, but the fact is that that money could pay 1/3 of a debt. Still, 1/3 of a debt is not going to make much of a dent anyway. That is why there are different chapters of bankruptcy that a person can file.
The Means Test
The means test takes into account all of your assets, income, and your debts. As stated before, you may find that your disposable income is not really disposable income. Considered in the means test are your daily expenses, such as gas for your car, personal hygiene, food, and various others. You may also find that your assets are not valued as highly as you thought. That table you thought was worth $500 is most likely worth $75.
Because more expenses are included in the test than what you would initially thing and assets are more likely valued at rummage sale value, you could qualify for Chapter 7. If it is found that you do have some disposable income, then you most likely will be filing Chapter 13.
Setting You Up With The Right Kind Of Bankruptcy
If your Minnesota bankruptcy attorney determines that Chapter 7 is right for you, then you will find that some assets could be seized if they fall outside of the state or federal exemption amounts. If you have assets that you don’t want to use, it may still be possible to file Chapter 13, but the repayment plan may not be what it needs to be to pay back the debt in a way that satisfies the creditors.
If you file Chapter 7 and your assets fall within the exemptions, then you will be able to keep those assets and move toward discharging your unsecured debt. You can reaffirm any debt that you wish to keep.
When Chapter 13 is the right kind of bankruptcy for you, you will be able to repay the debt in a repayment plan that works for you and the creditors. It is important to be able to pay this every month so that you do not default and everything goes back to the way it was. Your attorney can help you if you face a situation where your ability to make that payment is threatened.
Contact A Minneapolis Bankruptcy Attorney
It can be difficult to determine on your own what type of bankruptcy you should file. That is why your attorney will perform a means test to see what your income and assets are compared to your debts. The means test makes it much easier to determine which type is more appropriate for you. To find out which chapter you should file, call the McKinney Law Office’s Minneapolis office at 612-206-3706 or the St. Paul office at 651-379-4110 for a free consultation.
This law firm is a debt relief agency, and we help people file for bankruptcy relief under the United States Bankruptcy Law.