Archives for April 2015

The Simplest Chapter 7 Bankruptcy Filing

For many, simply the word “bankruptcy” conjures up visions of mountains of paperwork, complex filings, meetings with creditors and hearings in bankruptcy court. After the 2005 revisions to the bankruptcy laws, with the mandate that anyone seeking to permanently discharge debt under Chapter 7 submit to a “means test,” it may seem that the days of a “simple bankruptcy” are over. You may have to determine which debts qualify for discharge, as well as what assets are exempt from sale under state or federal laws.

Nonetheless, in our experience there are few situations where you cannot achieve some form of relief. Properly handled with experienced and careful guidance, there should be no reason a person in financial difficulty could not quickly and effectively complete a Chapter 7 bankruptcy, and get a fresh financial start. Difficulties are often caused by careless or inexperienced attorneys, or by debtors who are not truthful and candid with their chosen bankruptcy counsel. That said, even if the process takes longer than expected, you will benefit from the automatic stay, which goes into effect immediately, preventing creditors from calling, writing or taking legal action to collect a debt.

Here are the conditions that will make it easiest for you to file and complete a bankruptcy with little or no difficulty:

  • Your household income is less than the state median—Typically, if your income is below state median, you are free to file either Chapter 7 or Chapter 13, and do not need to undergo the complex calculations set forth in the means test.
  • You own little or no assets—If you have significant assets, you will have to determine what assets you can keep and which may be sold to satisfy your creditors. If you have few assets, chances are good you will be able to keep everything.
  • You have complicated or unusual secured debt (mortgage, car note or any obligation secured by collateral.
  • Your creditors have no basis for an allegation of fraud or other wrongdoing against you—such claims, including allegations of fraud happen rarely, but when they do, they take a long time to resolve.
  • You are not the owner of a business or active investment.
  • You have not repaid family members in the past year, or sold or transferred property of substantial value for less than it was worth.

Contact Neuner & Ventura, LLP

We understand the stress, anxiety and confusion that can be associated with a potential bankruptcy filing. We offer a free initial consultation to every client. For an appointment, call Neuner & Ventura at (856) 596-2828 or send us an e-mail. We do, however, reserve the right to charge a fee to review any work done by another attorney. Evening and weekend appointments are available upon request.

Representing Clients across South Jersey

Non-Business Exemptions from the Means Test

Exemptions from the Bankruptcy Means Test

Under the substantial revisions to the federal bankruptcy laws in 2005, Congress changed consumer eligibility for discharge of debt under Chapter 7, requiring that applicants qualify by passing a “means test.” The means test looks at income and debt, and disregards your claimed actual current income and expenses in determining whether the you have the “means” to pay creditors. Instead the “Means Test” applies a formula based on what the IRS uses in calculating what payments it will accept for repayment of unpaid taxes. If the formula shows a calculated ability to pay creditors in excess of a certain monthly amount, you are then ineligible for Chapter 7 and instead must repay creditors over a three-to-five-year period, with the minimum repayment being calculated under a variation of the Chapter 7 Means Test formula.

This can be a real problem where your actual expenses do not leave you with enough left over income to pay the calculated minimum payment.

There are some instances where the means test will not apply. For example, if the majority of your obligations (including taxes and mortgage debt) are “non-consumer” debts arising from or incurred in a business or investment, you don’t have to submit to the means test. In addition, you may be able to sidestep the means test if:

  • You are a disabled veteran whose obligations arose mostly when you were on active duty or were engaged in any activity related to or promoting homeland security or defense. The bankruptcy rules require that your disability be rated at 30% or higher, and that you have been discharged because of your disability. In addition, your disability must have been sustained in the line of duty.
  • You are in the military reserve or a member of the National Guard, and you were called to active duty after September 11, 2001. You must have been on active duty or involved in a homeland defense activity for 90 days or more. If you qualify, you will be exempt from a means test while on active duty and for 540 days after discharge.

The Means Test is a complication that is not always easy to apply. Yet careful planning—and in some cases, proper timing—can make a huge difference. This is an area where early planning and advice from a qualified and experienced bankruptcy lawyer are critical.

Contact Our Office

At Neuner & Ventura, LLP, offer a free initial consultation to every client. We do, however, reserve the right to charge a fee to review any work done by another attorney. Let us help you minimize the stress, anxiety and confusion that come with a personal bankruptcy filing.

For an appointment, call Neuner & Ventura at (856) 596-2828 or send us an e-mail. Evening and weekend appointments are available upon request.

Representing Clients across South Jersey

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