Get a Fresh Start with Chapter 7 Bankruptcy
In our ongoing videos, 3 Minutes to Financial Freedom, and as always, we’re going to put one of these up every weekday, Monday through Friday.
So here’s video 5, Is Chapter 7 Right for Me? So far we’ve gone over the factors we use to determine whether it’s right for you.
To review, number one, your income, are you below or above the IRS median income that’s currently in effect, they change these quarterly at least a couple times a year. Meaning on household size, if I have one person, if I’m about $45,000 to $50,000 or below, I’m probably okay. If I’m above that, then I’ve got to have expenses that will continue beyond the bankruptcy discharge that will bring me back down.
All of these, don’t give up just because it’s not an immediate yes. There may be legitimate ways to deal with that. Sometimes there are not, but often there are. The second factor is what kind of debt I have. Is it dischargeable, meaning can I get rid of it in this bankruptcy? Most debts are.
Signature loans, credit cards, medical bills, and some notes have property attached and then you’ve got to decide if you want to give up the property, but the debts themselves are dischargeable. It’s easier to talk about what isn’t.
Student loans backed by the government, are not dischargeable. Child support is never dischargeable. Taxes that are filed in three years or less. If they were filed three years ago or earlier, meaning closer to now than that, they cannot be discharged. If you filed them three years or more ago, absolutely dischargeable, which is a pleasant surprise for many people.
So that’s your next consideration. Can I get rid of most of my debt? Even if you don’t get rid of a lot of debt, if you do get rid of a good chunk, it may well be worth it to do it. Again, something to talk to me about in person.
The third final factor, what’s my property situation. What do I stand to lose from this? So exempt means protected. So your home’s exempt, and your vehicle’s exempt up to $7,500 in value. And of course, if you have a car note, you subtract that note from the value, and that’s where you come up with $7,500.
Your car could be worth $25,000, but your equity in it is $7,500 or less. So most people are okay with this. However, if you have second, third, and fourth vehicles, motorcycles, RVs, houses on the lake, oil royalties, or family land somewhere, these are considerations. You want to look at what is my property situation.
So again, three factors to determine if Chapter 7 is right for me. What’s my income? What kind of debt do I have? What’s my property situation?
I hope this has been illuminating for you. As always, you can reach out to me, an OKC Chapter 7 attorney, directly, EdwardKelleyLaw, K-E-L-L-E-Y, law at gmail.com, or call me at 580-478-3130, and we’ll be back with a very similar series on is Chapter 13 right for me next week.