How Much Do You Have to Be in Debt to File Chapter 7?
Sometimes, businesses go bust, and the people they owe money to are adamant that they should get paid. In such a case, the term “Chapter 7 Bankruptcy” comes up, but what does it mean? This type of bankruptcy requires the liquidation (or sale) of the debtor’s non-exempt property, with the proceeds going to service the debts.
In this article, we’ll look at the requirements to file for Chapter 7 bankruptcy in Mississippi, if you require a minimum debt to trigger it, why you may want to consider it, and a general guide of what assets are exempt and what is not.
Contacting a skilled bankruptcy lawyer to help in this situation usually ensures the best outcome for anyone who needs to file bankruptcy papers.
What is Chapter 7 Bankruptcy?
What exactly does Chapter 7 bankruptcy offer to someone who doesn’t have any money? This chapter is renowned for its swift debt resolution and fresh financial start. To qualify, filers must meet specific eligibility criteria, demonstrating their inability to repay debts. Mississippi adheres to federal bankruptcy laws but maintains its exemptions and regulations, which play a vital role in the bankruptcy process.
Alternatives to Chapter 7
Chapter 7 isn’t the only bankruptcy filing available to a person. Debt consolidation combines multiple debts into a single, manageable payment, often with lower interest rates. Debt settlement involves negotiating with creditors to reduce the overall debt amount.
Credit counseling agencies provide financial education and help create a debt management plan. Another avenue is Chapter 13 bankruptcy. The difference between Chapter 7 and Chapter 13 is that the latter is a reorganization plan that allows debtors to retain their assets and repay debts over time. Each alternative has pros and cons, so it’s essential to consult a bankruptcy lawyer before deciding on a course of action.
Debt Requirement to File a Chapter 7 Bankruptcy in Mississippi
While there isn’t a specific minimum amount of debt you need to file for Chapter 7 in Mississippi, you still need to meet several requirements. The essence of Chapter 7 is to discharge debts you cannot afford to repay. Qualifying debts typically include credit card balances, medical bills, personal loans, and more.
Mortgage and car loan debts aren’t typically discharged unless you’re willing to surrender the property. It’s essential to assess your financial situation and ensure that most of your debts align with Chapter 7’s debt relief objectives before pursuing it.
When to File for Chapter 7 Bankruptcy: The Means Test
How does the state know who can repay their debts and who can’t? The means test is a method they use to determine if you can’t afford to meet your debt obligations. In Mississippi, this test assesses your income and expenses, determining your eligibility for Chapter 7.
To initiate the means test, calculate your average monthly income over the previous six months. If this income falls below the state’s median income for a household of your size, you automatically pass the means test. However, further scrutiny is applied if your income exceeds this threshold, considering various expenses and deductions to evaluate your disposable income.
Chapter 7 means tests can be complex, making professional guidance invaluable. An experienced bankruptcy attorney can help you navigate this evaluation, ensuring accurate and complete documentation. They can also advise on timing your bankruptcy filing to maximize your chances of passing the means test.
If you pass the test, you can file Chapter 7 bankruptcy. If you fail to qualify for Chapter 7, you must find an alternative to discharge your debts. These checks are in place so that someone cannot keep filing for bankruptcy and taking out bad debts.
Choose a Lawyer that Understands the Bankruptcy Code
By now, you should know how much debt you have and whether you need to file for bankruptcy. The process can be complicated, so hiring a consumer protection lawyer to help you may be the best option.
Ware Law Firm has helped hundreds of clients find their way to a post-debt life through Chapter 7 filings. Contact us today for a consultation, and let’s help you determine if bankruptcy is the best option for you or if something else would suit your situation better.