Should I file a Chapter 7 Bankruptcy?
I filed a Chapter 7 bankruptcy for a nice couple who was very worried about filing bankruptcy. At first they wanted to file a Chapter 13 so they could pay back some of their creditors. After we prepared their paperwork and went over their income and budget, I explained they were in the negative each month and didn’t have the money to pay back to their creditors. Also, I had their payments set at $50 a month, which by the end of the bankruptcy the unsecured creditors would have received about $300 between them all and the Debtors owed around $150,000.
Their next concert was that they made too much money. The husband makes about $80,000 a year, and the wife has her own business that has a loss almost every month or just breaks even. They have two kids, ages 18 and 19. Both children live with them and are in college or will be starting college in August. I told the Debtors that they could claim the children as dependents for the purpose of bankruptcy.
One of their main concerns was their property. They have their residence and a rental house they are trying to sell to the renter. They didn’t want the Trustee to get the rental house and leave the lady renting it out in the cold. Neither house has any equity, so I told them the Trustee wouldn’t want the houses and they were both exempt property they could keep. The Debtors also have four case since there are four people of driving age in the house. They make the car payments for their children in exchange for them helping out with the business. All four car payments have loans and little to no equity. Again, the property is all exempt and the Trustee wouldn’t want it since there is no equity.
Even though the husband makes a salary well over median income for a family of four, based on the means test, the Debtors qualify for a Chapter 7.
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