Q: Hello I am currently on unemployment and I am failing to make ends meet at my debt is piling up, is chapter 7 an option?
My car payment is behind and they are talking about repossession i also have defaulted on my credit cards and other debt, I am seeking legal advice on what to do.
To be eligible for a Ch. 7 (liquidation, although you keep exempt property), you must have earned something less than the "median income" for your region (you can google it, as it fluctuates). If you have been below the "median" for the last six months, you are eligible for Ch. 7.
Eligibility for a Chapter 13 includes a "periodic income", and it has debt limits.
If deleting your credit card payments enables you to pay rent/mortgage and your car payment, you probably should proceed with a Ch. 7 filing.
But there's alot more to this decision, and you should meet with a PA bankruptcy attorney to analyze your situation and options.
It's important to note that legal advice cannot be provided on this forum. This is informational only.
The car loan is a secured debt (in the amount of the value of the car), and is not dischargeable in bankruptcy. Bankruptcy might help if you owe a lot more than the value of the car by discharging the unsecured portion (the amount owed above the value of the car). Bankruptcy can also give you some time to work out another solution for the secured debt (for example, reaffirmation or redemption).
As Mr. Winterstein noted, chapter 7 bankruptcy could help with your situation, but there are many factors to consider. You should speak to a bankruptcy attorney about your specific financial situation and history to determine whether it is the best option.
Timothy Denison agrees with this answer
Based on the information you provided, bankruptcy may be an option. If unemployment is your main source of income and you have limited assets, it is likely that you qualify for Chapter 7 bankruptcy. However, there are other factors to consider, such as a spouse's income (if you are married), your family size, other assets you may have, the type and amount of debt, whether you filed for bankruptcy before, etc.
As to your car, you can typically keep a vehicle in Chapter 7 if you are relatively current on your payments prior to filing and do not have significant nonexempt equity. However, Chapter 13 bankruptcy is sometimes a better option if you need time to catch up on the back payments on your car loan or other secured debt. In some cases, bankruptcy may also enable you to reduce the interest rate and balance on the car loan and stretch out the payments over a longer period.
Other options may also be available to you, such as debt settlement and debt defense. I'd suggest discussing your financial situation with a Pennsylvania bankruptcy attorney.
This general information is not legal advice and cannot substitute for a consultation with an attorney.
Timothy Denison agrees with this answer
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