Erase Debt with Chapter 7 Bankruptcy
If you are so deep in debt with so little income that you never stand a chance of getting out of debt, it may be time for you to erase your debt and declare Chapter 7 bankruptcy.
Declaring bankruptcy is truly the only way to erase debt without paying it off. It is true that new bankruptcy laws have placed restrictions on filing for bankruptcy, but many of these restrictions can be dealt with effectively, permitting you to use the bankruptcy law to erase your debt.
Credit Counseling Course
The new bankruptcy law requires every individual filing for Chapter 7 bankruptcy to complete a credit counseling course within six months of filing. The U.S. Trustee program maintains a list of qualified credit counselors who are authorized to give you the course, certify your compliance, and let you get on with your life. Many courses are offered online, making it super convenient for you to complete the course.
Financial Management Course
Before you can erase your debts by having them discharged in bankruptcy court, you must also complete an approved Financial Management Course. Again, you can get a list of approved courses from the U.S. Trustee program, and you can also take this course online.
Means Test
Under the new law, debtors must pass a means test before the law permits them to erase debt in bankruptcy. The means test is based on the annual income of the individual or family that is declaring bankruptcy, and it is adjusted based on family size, up to four people. The government recognizes the economic disparity of different parts of the country, and it applies a different means test for every state.
Under the means test, for example, the lowest median income is $30,424, for a single debtor in the state of Mississippi. The highest median income is $48,030 for a single debtor in Washington.
Even if your income is slightly higher than the median income in your state, you may still be able to avail yourself of chapter 7 bankruptcy protection and erase your debt. Consult you bankruptcy lawyer for details.
Chapter 7
Chapter 7 bankruptcy is considered a fresh start for the debtor. All non-exempt property is turned over to the bankruptcy trustee. Since Chapter 7 filers very rarely have any assets to speak of, no property is turned over, and the debtor's debts are discharged within approximately four to six months. Chapter 7 may be the best option to erase your debt.
