Frequently Asked Questions About Chapter 7 Bankruptcy

Can I File A Chapter 7 Bankruptcy If I Am Unemployed?

You can file for bankruptcy if you are unemployed. Being unemployed may aid you in the means test calculation, which reviews the past six months of income. Even if you might otherwise have had income above the median, if you are unemployed and unable to work, it may help you qualify for a Chapter 7 Bankruptcy.

When Will I Be Able To Get A Mortgage After Filing For Bankruptcy?

You would be able to obtain a mortgage, most likely very shortly after filing for bankruptcy. It is unlikely that you will be able to get the same interest rate because you will be considered a riskier investment. But you would likely be able to obtain a mortgage primarily because the mortgage is based on the value of the underlying asset, the house.

Suppose the bank believes the house is worth $100,000, for example. In that case, they’ll probably be willing to loan you the $75,000 or $80,000 as a part of that purchase price because they believe that asset has enough value to ensure that they get repaid.

Can I File For Chapter 7 Bankruptcy If I Make A Lot Of Money?

You can file for bankruptcy regardless of your income. However, there will be limits on what chapters might apply in different situations.

For example, Chapter 7 requires the means test to determine whether your debt is primarily commercial or consumer. If it is commercial, you’ll qualify for Chapter 7. If it’s mainly consumer debt, we must look at income and see if you qualify.

For Chapter 13, the limitation isn’t going to be on income but on the amount of debt you owe.

For Chapter 11, if you don’t qualify for either 7 or 13, there are no limitations on the income or debt that would keep you from filing a Chapter 11 so long as you otherwise qualify.

Will Filing For Bankruptcy Impact Any Current Or Future Job Opportunities?

There are some federal protections for discriminating against someone because they were in bankruptcy or have gone through bankruptcy. At the end of the day, a bankruptcy filing is unlikely to create issues with employment in the future.

Will Filing For Bankruptcy Stop The IRS From Collecting Tax Debts?

Like any other creditor, the IRS will be stopped initially from collection efforts by the automatic stay. The IRS and tax debts may have some special treatment in bankruptcy. Depending on the age of the debt and whether you filed all of your necessary returns, the IRS claims may be a priority claim.

Will Filing For Bankruptcy Get Rid Of Lawsuits Or Judgments Against Me?

The bankruptcy filing will come with the automatic stay, stopping any attempt to collect debts against you. This would include any lawsuits seeking to collect some indebtedness or hold you liable or responsible for some action other than a few exceptions.

When bankruptcy is filed, a notice will need to be filed in any pending litigation. That pre-existing litigation against you will be stayed until the creditor or litigant comes to bankruptcy court and litigates that issue in the bankruptcy court or asks for a leave to pursue their claims in the original court.

Should I Pay Off My Debts With My Savings Or File A Chapter 7 Bankruptcy?

Please do not attempt to pay off debts using a retirement account, whether credit cards or other unsecured debts, instead of filing a bankruptcy. Bankruptcy is a gift granted to you by Congress.

Your retirement funds may be completely safe from any recovery from creditors. By attempting to pay those debts and using your retirement funds, you are going beyond what is likely required of you under the Bankruptcy Code and, potentially, harming your ability to retire. This typically results in losing the retirement funds you could have protected.

If there’s some issue that might force a bankruptcy, or you are thinking about pulling out retirement funds to pay some debt, call a bankruptcy lawyer to get legal advice and counsel about whether to file or handle those debts.

For more information on Filing A Chapter 7 Bankruptcy, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (205) 506-3354 today.