If you are considering bankruptcy to help get you out of debt, you'll need to schedule a meeting with a bankruptcy attorney to know what your options are. Here are some things to go over with your attorney before you move forward with the bankruptcy process.
Does It Matter When You File Your Taxes?
Your lawyer is going to want to know about what you have done with your most recent income tax filing, since they'll want to know about if you are expecting a refund and if you have received it. This is important, because there may be exemptions that will allow you to keep your income tax refund, or cause it to be part of your bankruptcy filing. Your lawyer may advise you to file your taxes early or to delay filing your taxes in order to have it work in your favor for your bankruptcy filing.
Do You Have Exempt Assets?
Another thing to go over with your lawyer is to list any assets that could be exempt during a bankruptcy filing. Every state has its own laws about exemptions, which are assets that you can keep if you file for bankruptcy. For example, you are typically allowed to retain one vehicle for each member of your household that can drive. In other situations, you are only allowed to keep a portion of the asset. For example, you may have an exemption limit on a vehicle and will need to sell your vehicle to pay off some of your debts. If you sold the vehicle, you'd give up whatever portion is not included in the exemption limit.
Do You Qualify After A Means Test?
Your lawyer will look at your finances to see if you would pass a means test, which helps identify if you would qualify for Chapter 7 bankruptcy or need to use Chapter 13 bankruptcy. Means testing involves looking at your income and seeing where you fall in terms of other people in your area.
Some parts of the county have a higher standard of living than others, which means that there is a higher income for the average household income. Having a low income that passes a means test means that you can take advantage of Chapter 7 bankruptcy, which discharges many debts and does not require you to pay back. Thankfully, Chapter 13 bankruptcy will be the alternative, which requires some debt repayment. Contact a Chapter 13 bankruptcy lawyer for more information.