Income Considered When Determining Eligibility for a Chapter 7 Bankruptcy

What income does the court consider when determining a debtor’s eligibility for filing a Chapter 7 Bankruptcy?

Any income that a debtor receives other than social security or social security disability income will be considered by the court in the means test.  Very, simply put the means test is the method of calculating your average monthly income looking back over a  six month period.   That number and your family size will determine whether you “pass” the means test and are eligible for filing a Chapter 7 bankruptcy.  If you receive alimony, short term or long term disability through your employer, unemployment, etc., that income will be included in the means test.

However, the Court will consider social security income and social security disability income when looking at your schedule I income and that can then affect your ability to file a Chapter 7 bankruptcy.  For example-if you have a family size of three and you receive $2,500 per month in SSI and $2,000 per month in income from employment then you would have no trouble meeting the means test.  But the court will require you to list both sources of income on the Schedule I of your petition which would mean you have a total of $4,500 per month gross income.  If you don’t have reasonable and necessary expenses somewhere in the range of $4,350-$4,500 you could draw a Motion to Dismiss your case should you attempt to file a Chapter 7 bankruptcy.

If you have questions about whether or not your income is too great to file a Chapter 7 bankruptcy, contact Dailey Law Offices today to set up a free consultation with one of our experienced bankruptcy attorneys.


How Does Bankruptcy Effect Your Job Search?

Does a previous Bankruptcy effect your ability to find employment?

You might be surprised to discover that it is actually much more counterproductive to your job search to have negative items effecting your credit, such as repossessions, foreclosures, charged off accounts, etc., than a bankruptcy discharge.  The likely reason that prospective employers prefer bankruptcy to credit that hasn’t been “taken care of” is that it shows that you are making an attempt to clean up your credit rather than just letting it go.

There are of course instances where this may not be the case, such as employment in a financial institution, but for the most part prospective employers would much rather have an employee who resolves their problems rather than allowing them to get worse.

If you are having difficulty paying your bills and need to discuss your options, call Dailey Law Offices today for a free consultation.

Tax Refunds and Bankruptcy


Can You Keep Your Tax Refund in a Bankruptcy?

The short answer to that is maybe.   All assets are exempt up to a certain amount in a bankruptcy.  The exemption amounts are set by state statute.  In Ohio your tax refund asset would be claimed under the exemption of cash or you  could also use a wildcard exemption.  Currently those exemptions in Ohio are $850.00 and $2,300.00 respectively.  However, there’s more to it than that.  There may be other cash that you need to protect or claim exempt, such as cash on hand or cash in your checkings or savings account if you carry a substantial balance from month to month.  Additionally, you may have another asset that you wish to protect that has equity exceeding the allowable exemption for that item that you wish to apply the wildcard exemption to.  Some additional considerations are whether or not you filed your taxes and recevied your refund prior to filing bankruptcy and if so how those funds were spent and also whether any portion of your tax refund was or is anticipated to be from child tax credit.

If you need to file bankruptcy and expect to receive a refund in excess of $2,000.00 contact Dailey Law Offices today to talk to one of our experienced bankruptcy attorneys and learn whether or not you may keep your tax refund.

The Role of the Bankruptcy Trustee

The Trustee’s Role in a Chapter 7 Bankruptcy

When a debtor files a Chaptor 7 bankruptcy the United States Trustee appoints a trustee to liquidate any non-exempt assets of the debtor and dispense those funds to the creditors.  Each state sets different exemption amounts for different types of property.

The Trustee’s Role in a Chapter 13 Bankruptcy

When a debtor files a Chapter 13 bankruptcy the trustee confirms the debtor’s Chapter 13 payment plan and oversees payment on that plan.

General Duties of the Trustee

The trustee acts as an advocate for both the debtor and the creditors in that the trustee ensures that the debtor’s are not being harassed by creditors during the automatic stay and that the creditors are receiving their rightful piece of the debtor’s estate.

When is it a good idea not to file Bankruptcy?

Benefits of filing Bankruptcy

Perhaps the best way to start this post is to lay out the reasons why one would want to file bankruptcy.  In a Chapter 7 the benefits are discharging all of your unsecured debt and in a Chapter 13 the benefits can range from saving your house from foreclosure and your car from repossession to consolidating all of your debt.  Filing any chapter of bankruptcy will place on automatic stay on any civil actions pending against you and prevent or stop garnishments or attachments.

What should you do if any of the benefits previously discussed don’t apply to you?

The answer to this question is not an easy one.  For example if you are current on all of your bills and current on your mortgage and car payments and want to retain your car and house but you will have no income or just lost your income-what should you do?  If you file a Chapter 7 bankruptcy and then three months after your discharge are unable to continue to make your mortgage payments you have placed yourself in a difficult situation.  You can’t file Chapter 7 bankruptcy for another 8 years and so you’ve limited yourself to a Chapter 13 making payments you’ll likely be unable to afford.

If you are unsure whether to file bankruptcy because you’re not sure if you will benefit from a discharge, contact Dailey Law Offices today for a free consultation.

What to do when your Chapter 13 has been dismissed.

Call your attorney

A Chapter 13 bankruptcy lasts anywhere from three to five years and as most of us know-alot can happen in three to five years.  The majority of debtors’ budgets are tight because pursuant to the statute they should be, so if you or your spouse lose your job, your income gets reduced, or there is an unanticipated expense you may fall behind on payments.

I always advise my clients to call me right away if they fall behind on payments-even better yet, call me if you know you are going to be missing a payment in the future.

Your Options

If you only miss a payment or two or anticipate only missing a payment or two, then your attorney can most likely call the trustee’s office and get the trustee to allow your attorney sixty days to draft an agreed entry whereby you, the debtor, make up your plan payments without going over the length of your original plan.

If you miss more payments or won’t be able to make the payments in the future because of a cut in income or the like, then you may have no choice but to allow your case to be dismissed and then refile.  There can be issues with refiling such as creditors seeking relief from the automatic stay invoked by filing in certain circumstances as well as running the risk of being a serial filer if you refile too many times.

If you are in a position where your case has been dismissed and you think you need to refile or is in danger of being dismissed, call Dailey Law Offices today for a free consultation.


Are fines associated with criminal convictions dischargeable in a bankruptcy?

Non-dischargeable debts

Although the purpose of a Chapter 7 bankruptcy is to provide the debtor a fresh start by discharging your unsecured financial obligations, there are some debts that are non-dischargeable under the bankruptcy statue.  Those debts include, domestic support obligations, most student loans, some tax debts and criminal fines and court ordered restitution.

Section 523(a)(7) of the bankruptcy code states in pertinent part:

“a discharge under section 727, 1141, 1228(a), or 1328(b) of this title does not discharge an individual from any debt – to the extent such debt is for a fine, penalty, or forfeiture payable to and for the benefit of a governmental unit, and is not compensation for actual pecuniary loss, other than a tax penalty.”

The public policy reasoning behind the non-dischargeability of fines associated with criminal offenses is to ensure that someone who is guilty of a criminal offense is required to pay to the full extent of their culpability.

Is there anyway to include fines associated with criminal offenses in a 13?

Even if a criminal fine is not dischargeable during bankruptcy, it can be included in the Chapter 13 plan.  Just as is the case in for any other creditor during the pendency of a 13, The creditor (often the state government) is not allowed to collect from the debtor during the bankruptcy. In some cases this can prevent the debtor from having a license revoked or spending time in jail for non-payment of the fine.   However, at the end of the case a non-dischargeable debt survives and the state can collect from you.

If you need to file bankruptcy and have outstanding government fines, call Dailey Law Offices today to speak with an experienced attorney on your bankruptcy options.  


Can you Refinance Your Home After Filing for Bankruptcy?

Many homeowners who have filed bankruptcy and retained their homes wonder if they can take advantage of the current low interest rates and refinance their homes.  The short answer to that question is it depends.  If you have filed a Chapter 13 and you are still paying on your 13 your option would be to apply for a loan modification and you would need the trustee’s approval to move forward with that process.  If you have filed a Chapter 7 and your debt has been discharged the answer is a little different.

What are the qualifications to refinance your home if your debt has been discharged in a Chapter 7 Bankruptcy?

The requirements to seek refinancing from Fannie Mae or Freddie Mac after filing a Chapter 7 bankruptcy is that the discharge must have been granted at least four years prior to the discharge.  The requirements to seek refinancing through FHA is that the discharge must have been granted at least two years prior to the discharge.  The minimum credit score for anyone attempting to refinance is 580 and as would be the case for anyone seeking to refinance the borrower must show a good credit history since the discharge, a minimal debt to income ratio, good employment history and any other number of factors that a bank may consider when approving loans.

If you have any questions about how filing for bankruptcy will affect your credit or your ability to refinance your home in the future contact one of Dailey Law Offices’ experienced bankruptcy attorneys today for a free consultation.


Rebuilding Your Credit After Filing For Bankruptcy

What can you do to recover your credit after filing for Bankruptcy?

Many debtors mistakenly believe that they will be unable to obtain any new credit for 7-10 years after filing bankruptcy, but in most cases that couldn’t be further than the truth.  Although, a bankruptcy does remain on your credit for 7-10 years most debtors receive offers from creditors to obtain new credit almost immediately after their discharge in the case of a Chapter 7 or their confirmation in the case of a Chapter 13.

The first step that debtors can take to rebuild their credit after filing for bankruptcy is to obtain a copy of their credit report and make sure that all of the debts they listed in the bankruptcy are showing on their report as being closed in bankruptcy with a $0 balance. 

The second step is to obtain new credit.  It may sound counterintuitive, but in order to rebuild your credit you must have some sort of credit.  You may only be able to start out with a secured credit card but over time your credit limit will be increased and eventually that secured credit card will become unsecured.

Finally, make sure you keep your new credit up to date!  Make your payments on time each month and slowly but surely you will one day be able to proudly say that you have “good” credit.


Are your check cashing loans dischargeable in bankruptcy?

What is a check cashing loan?

A check cashing loan is a short-term, high interest loan that is secured by a post-dated check.  More and more people are turning to check cashing loans as a means to stay afloat with their bills between paychecks.  Because these loans are issued at such a high interest rate and become payable after such a short period of time, most debtors find that they are seeking more check cashing loans to pay their previous ones off.

Can you face criminal charges for passing bad checks if you include your check cashing loans in your Chapter 7 or Chapter 13 bankruptcy?

Generally, the answer to this question is no.  When you post-date a check you are asserting that you don’t have sufficient funds in your account to pay on the check the day you actually write it, so both parties understand that there is a future intent to pay on the check rather than a present intent.  This however does not prevent the check cashing company from presenting the post-dated check for payment subsequent to filing your bankruptcy, but some courts have ordered that the company has to return the money to the debtor if the check is cashed.

If you have any questions as to whether or not your check cashing loans will be discharged in a bankruptcy please consult an experienced Columbus Bankruptcy Lawyer today.