Being in debt is no doubt a stressful position to be in, and it may be tempting to consider filing for bankruptcy to resolve some of your debts. However, bankruptcy rules have changed and it isn’t as easy to discharges debts now as it was in the past. If you are considering bankruptcy, you need to consult with a bankruptcy attorney in Portsmouth, VA.
Chapter 7 Bankruptcy
If you want to discharge some of the debts you owe, then you may want to file for a chapter 7 bankruptcy, which is known as a liquidation bankruptcy. However, there are certain criteria a person must meet to ensure they qualify for this type of bankruptcy. One of the main criteria is to check if you are income qualified to file for a chapter 7.
The first part of the “means test” is to compare your current monthly income, which is done by averaging your income for the past six months prior to filing, to the median income of the state’s residents. In Virginia, the current median income is $77,500, so if your income is below that, then you are qualified to file for a chapter 7 bankruptcy. A bankruptcy attorney can help you determine if you’re qualified before filing.
Income After Expenses
If your monthly income is equal to or higher than the median, you still may qualify for chapter 7 under different guidelines. It depends on how much your income you have left after deducting allowable expenses. These expenses include: mortgage or rent payments, health or term life insurance premiums, medical expenses, child care, court-ordered expenses, involuntary deductions and tax payments. There are other expenses in this group that a bankruptcy attorney will also identify for you.
If your disposable income is high enough to allow you to repay some of your debts, then a chapter 7 bankruptcy will be converted to a chapter 13.
