Many people face unexpected financial problems in their lifetimes. If you cannot repay your debts to creditors, you may have to consider filing for bankruptcy. Most bankruptcies filed in the U.S. are either Chapter 7 or Chapter 13. The difference between the two generally boils down to your income, assets, debts and what you are working toward financially.
Sometimes a job loss, underemployment or an unexpected expense such as medical treatment can wreak havoc on your ability to meet your financial obligations. When you are unable to pay your creditors, filing for Chapter 7 bankruptcy may be an option.
Chapter 7 is the liquidation of your unsecured debts such as medical bills and credit cards. It is what people often think of when hoping to obtain a clean slate. It is typically reserved for low income debtors with little or no assets.
If your income is too high to qualify for Chapter 7 bankruptcy, you may be able to file for Chapter 13. This filing is a reorganization bankruptcy for debtors with regular income who can make payments through a reasonable repayment plan.
Whether one qualifies for a straight liquidation to pay-off debt – a Chapter 7, or for a payment plan – a Chapter 13, is through a means test. A means test determines whether the bankruptcy filer has the means or wage earning to survive on his or her own without a complete discharge of their debts.
The means test standard is based on the Wisconsin state median income. A debtor has to pass the means test to be eligible to file Chapter 7 Bankruptcy and also that the debtor has not filed for Bankruptcy within the previous 6 – 8 years.
If you need more information regarding bankruptcy or other legal matters, contact the Law Offices of Andrew C. Ladd, LLC. We have helped many clients through the bankruptcy process and can provide you with valuable insight into Chapter 7 or 13 bankruptcy filings. We have helped clients in Waukesha and throughout Southeastern Wisconsin use Chapter 7 to eliminate credit card debt, medical payments and other debt. Call today.