Lots of people file bankruptcy and my office has represented many debtors over the years. While some cases are “simple” most involve “issues” of some kind or another. We take the time to get to know you and your circumstances so that we can give you the best bankruptcy advice possible. If you would like to schedule a free initial consultation to discuss your bankruptcy options click here or call us at (425) 357-7691 or (866) 415-1705
SIGNIFICANT INCOME DOES NOT PREVENT A BANKRUPTCY FILING
The bankruptcy laws changed in 2005 adding the “means test”. A lot of emphasis was put on forcing debtors to file Chapter 13 when their income exceeds their allowable expenses (permitting significant payments to unsecured creditors). Chapter 13 is almost always more expensive than Chapter 7, frequently takes 5 years to complete (as opposed to about 4 months for Chapter 7), and doesn’t look any better on a debtor’s credit history. The means test is complicated, for example, not all income is treated the same in the means test and timing of income may affect how much debtors must pay their creditors. Neither are all expenses treated the same, some expenses are allowed based on IRS collection standards, others depend on the debtor’s actual circumstances. An attorney with knowledge of the means test can assist debtors in getting a Chapter 7 approved or minimizing their payments to unsecured creditors in a Chapter 13.
Frequently people who are facing divorce, or who are recently divorced, have questions about their bankruptcy options. Bankruptcy prior to a divorce may simplify the divorce process by eliminating debts that would need to be allocated in the divorce. If you anticipate that you may need to file bankruptcy after the divorce it is not a bad idea to consult with a bankruptcy attorney during the divorce process. Property settlements, support/maintenance, and debt allocation can be structured to maximize the benefit to the debtor.
Sometimes clients have assets that the law does not allow them to keep because they don’t have exemptions to cover the equity in the asset. Planning and strategy can be used to minimize non-exempt assets. If non-exempt assets exist many times a settlement can be negotiated with the Chapter 7 trustee that allows the debtor to retain the asset. Also, the debtor can retain the asset in Chapter 13 and pay creditors as much as they would have received in a Chapter 7.
The means test does not apply to everyone. Frequently debtors who have primarily business debts can receive a discharge in Chapter 7 despite substantial income. Corporations and LLC’s cannot file Chapter 13, however, via a sale of the business assets, some debtors can avoid Chapter 11 (very expensive) and reorganize under Chapter 13 (much more affordable). If you would like to schedule a free initial consultation to discuss your bankruptcy options click here or call us at (425) 357-7691 or (866) 415-1705.