Q: I need to know if I can file a Chapter 7 bankruptcy.
My income is below the median, but because my rent is quite low, I have about $500.00 left over each month after I pay my monthly expenses. Will the availability of the $500 each month prevent me from filing a Chapter 7?
The low rent will not usually affect your ability to file chapter 7 if your income is also low.
Get in touch if you are in the general Sacramento area and I will give you detailed information and advice.
A: You still may be able to qualify for chapter 7 bankruptcy. You would want to go over your expenses with a bankruptcy attorney and what the forms allow you to do. You may be surprised that you may actually qualify for bankruptcy. Feel free to reach out to one of us for a free consultation.
A: There is a lot more to it and most Bankruptcy attorneys will help you with pre filing strategic planning. Sit down with and experienced attorney and they will go over all your options.
A: As stated by my colleagues, there is a lot of information to analyze and review in order to provide a specific answer. Going over your monthly expense budget to ensure you have all your required monthly expenses might be the first step. Having that much in "disposable income" may raise issues for you if you file chapter 7. I urge you to meet with an experienced bankruptcy attorney to go over your income and expense budgets and evaluate your full financial picture.
Firstly, it doesn't "prevent" you from filing a chapter 7. You may file a chapter 7, but the issue becomes whether it is an abuse of the bankruptcy process to allow someone who has $500 left over each month in their budget to simply write off the entirety of their debts.
The court/trustee may point to your disposable income and say that you should be in a chapter 13 case, paying $500 a month to your creditors for a period of 3 years. I would suggest that you speak with a bankruptcy attorney and together you can review your budget to be sure you are considering all your "allowed" expenses and also that you are properly accounting for all of your income (for example, you may not be allowed to include certain retirement contributions, so you have to be careful in subtracting those amounts from your income when factoring in your available income).
A few monthly expenses that sometimes get overlooked are medical expenses (deductibles, copays, medications, dentists, optometrists), costs of owning a pet (vet bills food), car maintenance expenses (does your car need repair/regular maintenance), transportation costs such as uber/public transportation, a small amount for entertainment...and there are many more necessary and reasonable expenses.
You can see by these examples that there are many complications when it comes to determining your income and expenses as it relates to bankruptcy filing, so it can be quite helpful to work with an attorney who deals with these issues every day.
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