Facing overwhelming debt can take over every aspect of an individual’s life. The stress of constant calls from creditors, threats of repossession, the possibility of foreclosure, and simply being unable to meet one’s monthly living expenses may make debtors in Long Island wonder if they have any means of debt relief. For those who are struggling with overwhelming debt, one form of debt relief they may want to consider is Chapter 7 bankruptcy.
First of all, under federal law, to seek Chapter 7 bankruptcy an individual must pass the “means test” if his or her current income per month is above the state median. The means test is meant to identify and prevent abuse of the system. A presumption of abuse will be made if the individual’s aggregate income per month net certain expenses over the past five years is either above $12,475 or 25 percent of the individual’s unsecured nonpriority debts, if that amount adds up to $7,025 or more.
The presumption of abuse is rebuttable, under specific circumstances, with regards to any further expenses the individual has or any adjustments that should be made with regards to the debtor’s monthly income. If the debtor cannot successfully rebut the presumption of abuse, then he or she can file for Chapter 13 bankruptcy instead.
All of that being said, if a debtor in Long Island meets the Chapter 7 means test, he or she may be able to seek Chapter 7 bankruptcy. Debt relief under this type of bankruptcy filing is available regardless of how much debt an individual has or the status of an individual’s solvency.
However, a debtor cannot seek Chapter 7 bankruptcy if, within 180 days, a previous petition for bankruptcy was dismissed because the individual did not attend a necessary court proceeding or follow an order of the court, or if the individual had the prior case dismissed voluntarily when his or her creditors petitioned the court to reclaim property that they had liens on. In addition, individuals seeking Chapter 7 bankruptcy have to go through a court approved credit counseling course within 180 days before petitioning the court for bankruptcy.
Determining eligibility for bankruptcy can be complicated, and debtors should not rely on this post as legal advice. Instead, they may want to seek the advice of a bankruptcy attorney who can evaluate their situation to determine an appropriate course of action.