Do I Qualify for Bankruptcy?

There is always that phone call that starts with “do I qualify for bankruptcy” or even better, “I don’t qualify for a Chapter 7 bankruptcy, so I need to file a Chapter 13.”

I always ask how do you know and the answer is “I was doing ‘research,'” meaning a Google search.

Well, here is the answer if you qualify for bankruptcy: it depends.

For example, I’ve had clients who make more than $100,000 a year qualify for a Chapter 7 bankruptcy, and I’ve had others that make $60,000 not qualify.

I’ve had clients with large homes qualify and clients living on an acre lot in a manufactured home that is literally falling apart not qualify. The question is why and the answer is simple: not only is every case different, there are exceptions and/or exemptions to the rules.

Last week, someone called me saying he didn’t qualify because his Google search resulted in him concluding that his income was too high even though he was retired military on disability. He was wrong since there are exemptions from the “Means Test” in bankruptcy for disabled veterans.

In addition, there are times because of the way the rules of Bankruptcy are set up, meaning income is based on the last six months plus the current month, that you may not qualify now, but will in a few months.

For example, one of my clients is a car salesman. Because of changes at work leaving only him and another sales person, in one month he grossed more than $10,000. That month alone prevented him from currently qualifying since his spouse was also working based on the “means test.”

But, my client’s income has returned to normal, in the $3,000 to $4,000 range and his wife is not currently working. Thus, no issue qualifying.

The same holds true for clients who qualify today, but may not qualify in the future. Again, the means test is based on the last 6 months of income, so if a client is unemployed, he would likely qualify at the moment, but if that client has had high paying jobs in the past, he may not qualify once he/she is back to work.

So, do you qualify for bankruptcy? It depends.

For a free consultation, contact attorney Alex Hernandez.

Attorney Alex Hernandez

Representing clients in the areas of Chapter 7 Bankruptcy, Family Law/Divorce, and car and motorcycle accidents for 20 years. (904) 712-5565 or (305)-688-LAWS (5297). *Se Habla Español

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