A Chapter 7 bankruptcy is a very powerful tool in eliminating unsecured debt (credit cards, medical bills, pay day loans etc.).  The first step is determine if you qualify for a Chapter 7.  The bankruptcy code contains a test commonly referred to as the CMI (Current Monthly Income).  This test compares your families income to the median income for the same sized family in the state of Indiana.  If you are below the state median income, you qualify for a Chapter 7.  To see the median income for the state of Indiana go here.


This is a very simplified explanation of the CMI test.  Please note that I indicated that the family income is used, not just the income of the person who files.  In other words, whether you file by yourself or with your spouse, both incomes are used to decide whether you qualify.  


If you are over median income, it does not necessarily mean that you cannot file a Chapter 7.  The test is designed to predict how much, if any, you can afford to pay to creditors.  Just because you are over median income does not mean that you can afford to pay unsecured creditors.  There are deductions and allowances that can be taken from your income.  Once these are deducted, the test will arrive at a  dollar amount.  If that dollar amount is positive, you will not be able to file a Chapter 7.


Do not be discouraged if you filed out the CMI worksheet and it indicates that you cannot file a 7.  I have been doing bankruptcies for longer than the current law has been in existence.  I have handled many over median income clients and was still able to get them into a Chapter 7 bankruptcy.  Years of experience has taught me which deductions can legally be taken.  The more deductions a client has, the more likely it is that they will be able to file a Chapter 7.  


During my free consultation, I will look at your income level and give you my professional opinion as to whether you would qualify for a Chapter 7.  

How Chapter 7 Works

Benefits of Chapter 7


Chapter 7 is an incredible tool for fighting high-interest credit cards and insurmountable medical debt. This form of bankruptcy results in your unsecured debt going away permanently.  The biggest advantage of filing a Chapter 7 is that it is quick process.  Starting from the date your petition is filed, it takes 3 to 4 months to receive your discharge and close your case.  
You will not be required to make payments to the unsecured debt once you have filed the bankruptcy.  That is right, no more payments .... ever!  Creditors can no longer call you and all collection attempts, including court cases, must stop immediately.  If you have a garnishment, that must also stop as well.

 
Your case will begin by the filing of the case.   Fugate Law Firm P.C. files their cases electronically.  What this means to you is that if need it filed quickly, we can do it with the press of a button.  It can be instantly filed and you will have a case number to give to your creditors.
One question you may have is how bankruptcy may affect your credit. After all, what good would it be to file for bankruptcy if you were never able to get credit again? The truth is that bankruptcy often helps consumers reestablish credit.


This may be the exact opposite of what you have heard, but think about it: If you are late on payments now, your credit is already being negatively affected. Even if you catch up those payments, the damage has already been done. Your credit will continue to decline if the payments continue to be late. There are two ways to stop the downward spiral. The first way is to pay off or catch up on the payments. The second way is to eliminate the debt by filing for bankruptcy. Bankruptcy can provide a fresh start so that you can rebuild your credit. Interest rates may be on the high side at first, but you will see the interest rates go down after you start reestablishing your credit.

Which Chapter Should I File?


Chapter 7 is an incredible tool for fighting high-interest credit cards and insurmountable medical debt. This form of bankruptcy results in your unsecured debt going away permanently.  The biggest advantage of filing a Chapter 7 is that it is quick process.  Starting from the date your petition is filed, it takes 3 to 4 months to receive your discharge and close your case.  
You will not be required to make payments to the unsecured debt once you have filed the bankruptcy.  That is right, no more payments .... ever!  Creditors can no longer call you and all collection attempts, including court cases, must stop immediately.  If you have a garnishment, that must also stop as well.

 
Your case will begin by the filing of the case.   Fugate Law Firm P.C. files their cases electronically.  What this means to you is that if need it filed quickly, we can do it with the press of a button.  It can be instantly filed and you will have a case number to give to your creditors.
One question you may have is how bankruptcy may affect your credit. After all, what good would it be to file for bankruptcy if you were never able to get credit again? The truth is that bankruptcy often helps consumers reestablish credit.


This may be the exact opposite of what you have heard, but think about it: If you are late on payments now, your credit is already being negatively affected. Even if you catch up those payments, the damage has already been done. Your credit will continue to decline if the payments continue to be late. There are two ways to stop the downward spiral. The first way is to pay off or catch up on the payments. The second way is to eliminate the debt by filing for bankruptcy. Bankruptcy can provide a fresh start so that you can rebuild your credit. Interest rates may be on the high side at first, but you will see the interest rates go down after you start reestablishing your credit.

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The information on this website is for general information purposes only. Nothing on this site should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing does not constitute, an attorney-client relationship.Fugate Law Firm is a debt relief agency. We help people file bankruptcy under the Bankruptcy Code.  This site designed by Ava Fugatti.