Chapter 7 can help indebted Garner NC consumers
Image Source: Flickr CC User Lee Coursey
Garner, North Carolina consumers looking to get out of debt they can’t afford may benefit significantly from Chapter 7 bankruptcy. If you’re deep in debt, living paycheck to paycheck, and avoiding debt collectors, this bankruptcy chapter can discharge your debts and give you a financial fresh start. But will you qualify? You might – even if you’re earning a high income. Here’s what you need to know.
Income Is Not Always a Barrier to Chapter 7
If your income is low, you should have no obstacle to filing a Chapter 7 bankruptcy. Low income is typically only an issue if you want to get on a Chapter 13 repayment plan, in which case your petition and plan can be rejected if you can’t afford to stick to the payment schedule. But with Chapter 7 low (or no) income is not an obstacle to getting debt relief.
But what about higher income? Above a certain threshold, what becomes important is your debt to income ratio. Even if you’re making six figures, so long as your debt overwhelms your ability to pay, you may still qualify for Chapter 7. Many people assume they can’t file bankruptcy if they’re earning a good amount of money, but that’s just not true. To determine if you qualify despite a high income, you typically just have to take what's called the "Means Test."
Can You Pass the Chapter 7 Means Test?
The Chapter 7 Means Test is a calculation that takes into account your income and expenses, including household costs of living, healthcare costs, housing and utility expenses, car loan and vehicle operation expenses, taxes, alimony, child support, and other allowed expenses. Your leftover income is then compared to your debt to see whether your debt outweighs your ability to pay.
If you earn less than $42k and are filing individual bankruptcy and live alone, you won’t have to take the Means Test. For a household of two, the threshold is around $52k. For a household of three or four, the income level to skip the Test is $59k and $70k respectively.
What Greensboro Chapter 7 Bankruptcy Can Do for You
If you qualify for Chapter 7 bankruptcy, the debt relief that it offers is sweeping. You can have credit cards and medical bills discharged within a couple of months of filing your Garner bankruptcy. Some income taxes that are past due may also be dischargeable. However, student loans can’t be discharged unless you have extenuating circumstances.
Child support and alimony are also not dischargeable – those can only be adjusted through family court in a separate action. Secured debt, such as an auto or home loan, will be affected by the Chapter 7 bankruptcy if you’re behind on payments. However, this can be a good thing if the car payment or mortgage are unaffordable and you want to unload them and the associated asset.
How to Find out More about Garner Bankruptcy and Debt Relief
If you’re drowning in debt, you don’t have to live like this. Garner Chapter 7 bankruptcy offers significant and rapid relief. Even if you’re unsure about choosing bankruptcy, it's still worth exploring the benefits, determining whether you qualify, and seeing which debts you can discharge before you make up your mind.
Contact the Law Offices of John T. Orcutt for a free Garner, North Carolina bankruptcy consultation. Call +1-919-646-2654 now for a free NC Chapter 7 bankruptcy appointment to discuss your options at one of our convenient locations in Raleigh, Durham, Fayetteville, Wilson, Greensboro, Garner or Wilmington.