Tag Archives: Means Test

Why people chose Chapter 13 bankruptcy

Why people chose Chapter 13 bankruptcy

Chicago bankruptcy attorney Joseph Wrobel is often asked why people chose Chapter 13 bankruptcy. His frequent answer is, “It depends.” After the initial meeting with your bankruptcy attorney you should be advised whether you qualify for a Chapter 7 or a Chapter 13 bankruptcy. Your bankruptcy attorney asks for certain documents and your financial statements, so they can analyze your financial status using the bankruptcy means test. The means test is a rather complicated mathematical process your bankruptcy attorney uses to determine whether your income and finances allow you to qualify for Chapter 7 or Chapter 13 bankruptcy.

What is the difference between Chapter 7 and 13?

When most people think about bankruptcy they are thinking about Chapter 7, the full discharge and wipeout of all the bills and debts allowed to be discharged in bankruptcy. You must qualify for Chapter 7 as set forth in the means test your attorney will calculate. If you make too much money, you might not qualify for Chapter 7 discharge and you can use the option of Chapter 13 instead. While a Chapter 7 bankruptcy is a relatively quick discharge of the qualified debts you can eliminate, a Chapter 13 bankruptcy is more like a repayment bankruptcy, where you pay back a portion of your debts by making a fixed payment to the bankruptcy trustee once a month for up to five years.

If you have too much equity in your home, have assets of special value like an inherited collector automobile, or simply make too much money to qualify for Chapter 7, you can file a Chapter 13 bankruptcy.

Getting immediate relief from creditors and bill collectors

As soon as either a Chapter 7 or 13 bankruptcy petition is filed, you are protected under the Automatic Stay provision of the U.S. Bankruptcy Code. The Automatic Stay is the law that prohibits any of your creditors or collection agencies from making any efforts to contact you during your bankruptcy. If you have a Chapter 13 bankruptcy, your creditors cannot call you for the entire term of the bankruptcy, even if it is the entire five-year period while you make monthly payments to the trustee who pays the creditors.

Garnishments are also stopped by the Automatic Stay when you file a Chapter 7 or 13 bankruptcy. The threat of garnishment alone is enough for many people to decide to file for bankruptcy.

For more about “Automatic Stay,” read our article, “Examples of the automatic stay and how it operates in bankruptcy law.”

Taking up to five years to repay your debts under a Chapter 13 plan

When people desire time to get caught up on their bills, a five-year Chapter 13 repayment plan can mean financial freedom and peace and quiet when the collectors stop calling. Depending on your finances and the results of your means test, your bankruptcy attorney may be able to get you on a plan where you only repay a portion of your debts.

Keep your home and your car with a Chapter 13 bankruptcy

Do you have a great interest rate or mortgage deal you don’t want to lose? Chapter 13 allows you to keep your home and your equity while you repay the debts and bills you were otherwise unable to pay. This also applies to your car. If you have car payments, they can be included in the monthly payments to the Chapter 13 bankruptcy trustee over your five-year plan. Of course, if you want a shorter plan, that may be an option for you.

When people find out about the benefits of a Chapter 13 bankruptcy plan, they often wish they had known so long ago. To find out more about Chapter 13, call Joseph Wrobel, Limited.  

Why people chose Chapter 13 bankruptcy
Helping people get out of debt with dignity and respect for over 40 years.

About us: Joseph Wrobel, Ltd., works with clients to find out if they qualify for Chapter 7 or 13 bankruptcy, and their options and rights under the law. The firm will also advise and assist clients with questions and concerns about the collectors and their rights to pursue you.

Joseph Wrobel, Ltd. helps people get control of their finances and a fresh start at financial freedom. The firm’s website contains informative videos about financial issues as well as bankruptcy protection for families who want a fresh start. (312) 781-0996.

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PODCAST – Bankruptcy Basics: Taking the Mystery Out of The Median Income/Means Test

What may seem to be the simplest of cases turns out to be more complicated than a client can imagine. Filing a bankruptcy on your own is pennywise and pound foolish. The peace of mind of knowing the case is done properly from the outset is worth far more than the cost of the attorney fees. Our consultations are always free.

On today’s episode of the Chicago Bankruptcy Update show, we take the mystery out of the median income/means test to qualify for bankruptcy.

Click here to listen to the podcast recorded 02/18/2014.

Bankruptcy issues covered on this show:

1) How does the Chapter 7 means test limit bankruptcy protection to only the individuals who need it?

2) What happens if your income is more than the median income but you still cannot pay your debts?

3) If I repay or agree to repay some of my debts, can I then pass the income means test for Chapter 7?

4) If I do pass the income means test, under what circumstances is a bankruptcy most beneficial?

Chicago bankruptcy and consumer credit attorney Joseph Wrobel shares news and updates in bankruptcy law as well as business and consumer financial matters. It has been documented that financial troubles can cause all sorts of ailments, the most common of which is sleeplessness. Joseph Wrobel helps clients alleviate their anxiety created by the inability to pay bills and the embarrassment of financial distress.

Joseph Wrobel has been a practicing attorney since 1973 and has experience in a wide variety of law relating to legal matters for individuals and families. Wrobel helps clients get out of debt and get a fresh start. He is an active member in several bar associations and the Bankruptcy Panel of Pro Bono Program of the Chicago Volunteer Legal Services. After serving the U.S. Army Reserve 363rd Civil Affairs Unit, Wrobel earned a B.A. in Psychology from Northwestern University and in 1973 he earned a JD from DePaul University Law School.

Visit our Chicago Bankruptcy Site online for more about the firm.