Chapter 7 Vs. Chapter 13. Which Benefits Your Situation Better?
Video Transcribed: Oklahoma City Bankruptcy Attorney Edward Kelley 888 Debt Line as always answering your bankruptcy. This series is Should I Do a Chapter 7 or a Chapter 13. So what are the considerations? We’re going to go through all of them in this series.
First one is what is my income. So in order to do a chapter seven you need to be below certain income limits so that depends on your household size and the current IRS basically poverty standards. They don’t call them that but they’re looking for your yearly income and the number in your household.
Now within that they consider all wages so even if you’re doing it by yourself, if your spouse lives with you and works, you need to count their income and they’ll have to submit their income information although they won’t be part of the bankruptcy.
Now if you live with people but you pay some sort of rent then you can consider that your own household and not consider the income. So even with your parents if you are basically renting a room from them and paying every month then you’ll want to have a documentation, paper trail, checks or something that you’ve paid your rent with, you can consider that a one person household. So the IRS standards vary from state to state and change every year or more or so.
Currently for one person in Oklahoma you’re in the $40,000s range. And the thing is if you’re over that limit then you can still qualify if you have expenses that bring you down to where your disposable income is a negligible, less than a hundred dollars or so.
So, but those are expenses that will not be discharged in the bankruptcy, that does not include any of the debt you’re getting rid of. But if you have unusual medical, a high mortgage because you get dollar for dollar credit on mortgage and car payments, or something that you’re keeping and that may bring you down.
And you could add about closing up between nine and $10,000 for each additional member in the household. And so, in the $50s, $60s, $70s and so forth. So that’s your first consideration.
Of course you probably want to do a seven if you can other than the considerations we’re going to talk about in the rest of the series. Seven is a liquidation, be done and walk away, whereas 13 you pay for five years and we’ll get more into that later in the series.
As always, if you want to reach me, have a direct question or need help with a bankruptcy, 1-888-Deadline, Edward Kelley. And you can always reach me at my email edward@wirthlawoffice, or on Facebook at our Facebook group Oklahomans for debt relief.