Do you find yourself asking, “What does bankruptcy do?” When you are facing what feels like insurmountable financial hardship, you may turn to a possibility you’ve avoided considering before – filing for bankruptcy. The definition of eligibility for Chapter 7 bankruptcy in Dallas, however, must meet certain criteria in terms of your income, assets, and debts.
Speak with an attorney who can explain bankruptcy court rules and address the bankruptcy definition in terms that relate directly to your financial situation.
Requirements for Filing for a Chapter 7 Bankruptcy in Dallas
There are 2 main types of bankruptcy filings for individuals, and a Chapter 7 bankruptcy refers to instances in which the person filing for bankruptcy lacks enough income to establish a Chapter 13 repayment plan.
Under the rules for Chapter 7 bankruptcy in Dallas, an applicant’s “current monthly income” cannot exceed the median income for a family of comparable size in your state. If your income does exceed the median income, you may have to file a Chapter 13 bankruptcy, which includes repaying some or all of your outstanding debts.
It should be noted that disabled veterans who incurred debt while serving on active duty and persons whose debts are the result of a business operation are the exception and are usually fast-tracked to Chapter 7.
Passing the Means Test for Chapter 7 Bankruptcy
By definition, if your income surpasses the average median income, then to be eligible to file for a Chapter 7 bankruptcy instead of a Chapter 13, you must pass a “means test.” A means test concludes if you have enough income, after your expenses, to repay a percentage of unsecured debt over a 5 year period.
If you obtained a Chapter 7 bankruptcy discharge within the last 8 years or a Chapter 13 discharge within the last 6 years, you will not be eligible to file until the respective periods have elapsed.
Additionally, you will not be eligible if you filed for either a Chapter 7 or Chapter 13 bankruptcy that was dismissed in the last 180 days on the grounds of:
• violation of a court order: • fraudulent filing; and • because you requested a dismissal when a creditor demanded relief from the automatic stay.
How the Bankruptcy Courts Detect Fraud
In such cases that the bankruptcy court rules that you have attempted to defraud your creditors in some way or that you have attempted to conceal certain assets so as not to have them factored into your repayment plan or means test, you will not be eligible to file for bankruptcy.
Bankruptcy courts look for certain red flags that indicate fraud or concealment such as:
• transferring assets to relatives or friends in an attempt to conceal them from creditors and the courts; • acquiring debt through purchasing luxury items you had no way to afford at the time you purchased them; • hiding assets from your spouse during divorce proceedings; and • being dishonest about your debts or income on a credit application.
Engaging in any of these activities will put the bankruptcy courts on alert and will likely result in the rejection of your application to file for Chapter 7 bankruptcy and likely for bankruptcy of any kind. The failure to disclose is considered perjury and may also carry with it the possibility of criminal prosecution.
One of our attorneys can respond to your concerns – from answering the question, “What does bankruptcy do?” to explaining the bankruptcy court rules as they apply to your case. Finances have a way of heightening our emotions, so speak with a lawyer who can navigate you through this complex process with as little impact on the rest of your life as possible.
Contacting a Chapter 7 Bankruptcy Attorney
At Warren & Migliaccio, our goal is to protect you and your family so that you can take the necessary steps to proactively plan for your future. When financial circumstances outside of your control threaten your wellbeing, take control of your situation by contacting our Dallas law firm. We’ll guide you through the legal process so you can make informed decisions and choose the best course of action. If a personalized, teamwork-driven approach sounds like what you need for your case, call 1-888-584-9614 today. We’re here to help.