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Covey Bankruptcy Law Firm, P.C.
Covey Bankruptcy Law Firm, P.C.'s posts

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Should I file bankruptcy for $20,000?

I believe it is a matter of degree. Sometimes I am asked, “I have $20,000 in debt (or $10,000 or $100,000 or whatever).  Can I file bankruptcy?  And if I can, should I file bankruptcy?”  The answer to can you file bankruptcy is yes. There is no minimum amount of debt required to file bankruptcy.  If you are otherwise qualified, you can file bankruptcy.

Whether you should file is more of a judgment call.  Just because you can file does not necessarily mean you should.  I have clients with little debt that choose to file bankruptcy for strategic reasons or because their income level is just so low that they just can’t pay back $10,000 in debt.  On the other end of the spectrum, I meet people who have over $100,000 in credit card debt, taxes or other debt, but do not file for various reasons;  maybe they actually have the income to pay it off or will lose assets if they file bankruptcy.

And I meet with clients who  could go either way.  They can file and get a good result, or maybe they can pay back the debt in full or in part with a Chapter 13 bankruptcy.  It then it depends on whether they can pay back the debt in a few years, or whether it will take many many years of minimum payments and it depends on their short and long term goals.   The decision of whether to file bankruptcy is based on a complete analysis of each individual’s situation.  Sometimes bankruptcy is a silver bullet and sometimes it’s not.

For those having financial problems and wondering what to do, the best course of action you can take is to gather information.  Talk to a financial advisor, a bankruptcy attorney and any other professionals that may be relevant to your situation.  At the very least, you want to make an informed decision.

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Bankruptcy Meeting of Creditors - What to expect and 10 FAQ you must know. What is the Meeting of Creditors? Will I see a judge? What do I bring and how should I dress? What questions will I be asked at my 341 Meeting?  Read this before your meeting of creditors and you will be better prepared and much less stressed about going.

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New Illinois Bankruptcy Means Test Numbers for April 1, 2013

Means Test Numbers
Higher Illinois Bankruptcy Means Test Household Income Averages for April 2, 2013
The Illinois bankruptcy means test median numbers have risen slightly for cases filed on or after April 1, 2013.

Household Size

1 – $47,485
2 – $59,861
3 – $68721
4 – $80,776
* – Each additional person add $8,100
What this means exactly for prospective Chapter 7 bankruptcy filing in Illinois is that your household may earn a little more money and still qualify for Chapter 7 bankruptcy eligibility.

New Bankruptcy Means Test Income Numbers Effective April 2, 2013.

The new income numbers are used to complete the Means Test and determine whether or not a person qualifies to file Chapter 7 bankruptcy in Illinois and other states.

If your gross household income falls below the applicable numbers, you pass the Means Test and qualify for a Chapter 7 bankruptcy.

If your household income exceeds these figures, you may still qualify for Chapter 7 bankruptcy if you have enough allowable expense deductions to offset your above median income or if the projected amount of disposable income would pay less than 25% of your total unsecured debt.  Also, if your debt is primarily business debt then you do not even have to do the means test and automatically qualify for Chapter 7 bankruptcy.

A person who fails the Means Test and does not qualify to file Chapter 7 bankruptcy may choose to file a Chapter 13 bankruptcy instead.

You may also want to read:  Qualifying for Bankruptcy and Business Debt and the Means Test

#meanstest   #bankruptcy  

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Receive a 1099c this year? Read this post on Five Ways Not To Pay Taxes on Forgiveness of Debt.
#bankruptcy   #tax   #debt  

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