Consumers who are struggling with excessive amounts of debt may qualify for bankruptcy, allowing them to have their excess debt discharged so that they can rebuild their credit. There are two types of bankruptcy, Chapter 13 and Chapter 7, available to consumers depending on their circumstances. Chapter 7 bankruptcy is available for consumers who have little to no income and cannot afford to make any kind of payments on their debts. In order to qualify for Chapter 7 bankruptcy, you must first pass the means test.
The means test was designed to prevent people from abusing the bankruptcy process by requiring them to prove that they have insufficient income to repay their debts. When a consumer takes the means test, their living expenses are deducted from their net income to determine their disposable income. If a consumer's disposable income is less than the state average, he or she may qualify for Chapter 7.
Consumers who file for Chapter 7 bankruptcy have to hand over any nonexempt property and assets to a trustee to be liquidated. This means that you may lose certain property, such as your car or your home, to repay your debt before the rest is discharged, or "forgiven." This is often considered a downside to Chapter 7 "liquidation" bankruptcy. An upside to Chapter 7, however, is that your debts will be discharged much faster than if you had filed under Chapter 13.
Moncure & Barnicle is dedicated to helping clients find relief from overwhelming debts by guiding them through the bankruptcy process. We can help you see the big picture so that you can make the best possible decision for your case. A Mid Coast Maine lawyer from our experienced team can help you take the means test and pursue the chapter that will benefit you and your family the most.
Contact us today to learn more!