When you have enough money to pay only the minimum payment every month, bankruptcy is often the most sensible option. While you have a number of options on the table when you reach this point, one choice for those who make less money than the median in Minnesota is Chapter 7 bankruptcy. Chapter 7 bankruptcy is the more desirable type of bankruptcy because it doesn’t require a payment plan and the attorney’s fees are less.
The median income is the point where half of the households make more and half of the households make less, so if you are in the half making less, then you will usually qualify for Chapter 7. This is true even if you are making less temporarily and might make more in the future. There are time periods and math to make sure, but that is the lawyer’s job!
What Makes Chapter 7 Unique
Chapter 7 bankruptcy, according to The Nest, is not an option that’s available for anyone going through trying financial times. Generally speaking someone needs to have an income that is below the median level for their state in order for it to be a viable choice. There are also certain kinds of debt that Chapter 7 bankruptcy cannot discharge, including government funded student loans, spousal support, child support, cooperative housing fees, and several others according to FindLaw‘s list.
If someone meets the income requirement, though, and their debts are of the sort that can be discharged under this form of bankruptcy, then it’s possible for them to submit the paperwork and start the process.
What Happens If Your Circumstances Change?
Life comes at you fast, and sometimes unexpectedly good things occur as well as unexpectedly bad ones. Maybe that promotion you figured you’d been passed over for comes, or a relative unexpectedly dies and leaves you as the sole beneficiary of their estate. You might even get a free lottery ticket, and find that you’ve won big, or even really big.
But how does something like that change your bankruptcy proceeding?
Well, it’s going to depend partially on how unexpected the change happens to be, and how big that change is. For example, if you know you’re going to get a .50 an hour raise at work because you’ve been in your position for a year, then yes, you were aware that your circumstances might improve marginally.
However, if the calculation for that hourly raise still doesn’t change your qualifications, nor would it make a serious dent in your ability to pay your debts, then it likely wouldn’t have much of an effect on your bankruptcy case at all. On the other hand, if you got your dream job with dramatically increased pay, or you received a large inheritance or settlement, then that definitely would affect your proceeding.
If you know you’re going to have changes to your circumstances before you file bankruptcy, then you need to inform the court so those changes can be weighed in along with any future decisions. If you know you’ll be starting a new job, getting a raise, etc. and it isn’t mentioned in your filings then that can have negative repercussions for your case.
On the other hand, if something unexpected occurs (winning the lottery, getting an inheritance, etc), then you simply need to inform the people handling your case as soon as possible. Because anything that significantly changes your circumstances could affect how your bankruptcy is handled, and it could have a big impact on what happens from that point on.
Getting Good Answers About the Bankruptcy Process Isn’t Easy
Going through bankruptcy isn’t easy, and it never happens under the best of circumstances. If you have questions about what could happen to you during a bankruptcy proceeding, and how your changing life circumstances might affect your case, then all you need to do is contact us today. We’ve got the answers you’re looking for, and we’ll be happy to help you get a better picture of what you can expect.