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The Bankruptcy Means Test Explained

The Bankruptcy Means Tests is one of the most complicated aspects to bankruptcy law. This “test” was born of the 2005 changes to federal bankruptcy law implemented by congress in the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA). Effectively, individuals with primarily consumer debts have to prove that they are not abusing the bankruptcy laws.

To be certain, the means test makes qualifying for Chapter 7 bankruptcy more difficult; however, an experienced bankruptcy attorney can help you navigate the means test and qualify for the debt relief that you deserve.

The Bankruptcy Means Test Explained

The means test is a review of your income minus expenses. It determines whether or not you qualify for bankruptcy relief under Chapter 7.

If your net income falls below the state median for your household size, then you automatically qualify for Chapter 7 bankruptcy. Because there is no “presumption of abuse,” below-median debtors do not have to run the means test.

If your net income is above the state median for your household size, then you must run the means test to determine whether or not you qualify for Chapter 7 bankruptcy. An above-median debtor must overcome the presumption of abuse and demonstrate that the qualify for Chapter 7 bankruptcy. Understand that having a high income does not preclude you from relief under Chapter 7.

With the help of the experienced attorneys at The Law Offices of Barbara B. Braziel, even people who earn well above the median income for our state can qualify for Chapter 7 bankruptcy. Contact us for a free consultation and analysis of your income.

Median Income In Georgia

As of November 1, 2016, the median household income in Georgia is:

  • Household of One: $42,735
  • Household of Two: $55,600
  • Household of Three: $61,705
  • Household of Four: $72,290
  • Households of more than four: add $8,400 for each individual in excess of four.

If you live in Georgia and your gross household income falls below these figures, then you qualify for Chapter 7 bankruptcy relief without further means test analysis. If you live in Georgia and your gross household income is above these figures, then you must run the means test to determine if you qualify for Chapter 7 bankruptcy relief.

Calculating Median Income

The U.S. Bankruptcy Code defines how to calculate income for purposes of bankruptcy. It operates off of the presumption that your ability to pay back your debts in the future should be determined by your average income over the past 6-months. This calculation using a 6-month look back period does not account for your present circumstances, including recent decreases in your income.

Income for the purposes of the means test is calculated by taking your average income for the past 6-months. The calculation must include all income that you receive. However, the following benefits are excluded from the means test calculation of income: social security benefits, payments to victims of war crimes or crimes against humanity, and payments to victims of international terrorism or domestic terrorism.

Calculating the Means Test

The means test calculation considers your income minus allowable expenses. Essentially looking at your ability to fund a Chapter 13 re-payment plan.

The allowable expenses in the means test are calculated based on a mix of your actual expenses and standard pre-determined expenses. You can explore the official means test form here. An experienced bankruptcy attorney can help you navigate through the means test.

We are here to help you determine if you qualify for bankruptcy, and if so, what bankruptcy chapter will best serve your needs. We offer free consultations to anyone in Savannah, GA and all of the surrounding areas.

 

We are a debt relief agency. We help people file for bankruptcy relief under the U.S. Bankruptcy Code.

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The Bankruptcy Discharge Order

Receiving a Bankruptcy Discharge Order from the bankruptcy court is the goal when you file for bankruptcy.

A bankruptcy discharge is a court order that releases you from personal liability on certain debts. You are no longer legally required to pay back any debts that are part of your bankruptcy discharge. Further, the creditors of discharged debts can never legally attempt to collect payment on those debts.

Discharge Does Not Apply to All Debts 

Bankruptcy discharge applies to unsecured debts, which includes credit cards, medical debts, personal loans, and other consumer debts.

Bankruptcy discharge does not apply to debts that are deemed nondischargeable by the Bankruptcy Code. Debts that are nondischargeable are not erased by bankruptcy, and you are still liable to pay them back even after successfully filing for bankruptcy. Nondischargeable debts include student loans, some taxes, back child or spousal support, as well as some other types of debt.

When you hire us to help you file for bankruptcy, we will review your specific situation and make sure you know which of your debts will be erased by your bankruptcy.

Discharge Erases Personal Liability Only

It is important to understand that bankruptcy discharge applies to personal liability only. This matters in regard to any of your secured debts. Secured debts are those backed by collateral, such as a home mortgage or car loan.

To illustrate why this matters, consider the following example:

Say you have a secured car loan. If you fail to make your payments on the car loan, the creditor has the right to repossess the car. In the absence of a reaffirmation agreement, after receiving your bankruptcy discharge you would no longer be personally liable to pay back the debt on the car, but if you fail to make your monthly payments the creditor retains the right to repossess the car.

Discharge is Granted at The End of the Bankruptcy Case 

The Bankruptcy Discharge Order is issued from the Bankruptcy Court at the end of a successful bankruptcy case.

The timing of when discharge is granted depends on which chapter of bankruptcy you file. If you file for Chapter 7 bankruptcy you will be granted discharge after the time has tolled for your bankruptcy trustee and creditors to object to discharge. In a Chapter 7 you can typically expect a discharge 4 to 6 months after the date your case is filed. If you file for Chapter 13 bankruptcy you will be granted discharge after you have made all payments under your repayment plan.

Creditors Must Cease All Collection Action Even Before Discharge

During the time you are awaiting your bankruptcy discharge your creditors are not allowed to attempt any collection action against you. All collection activity must stop as soon as your bankruptcy case is filed. Read our articles here and here on the power of bankruptcy to stop all collection action.

Here at the Law Offices of Barbara B. Braziel we make sure you understand the benefits of bankruptcy and how filing with affect you and your family. We take the time to explain the bankruptcy process to our clients. We invite you learn more about our firm here and come meet with us for a free no-obligation consultation.

Reach out to us by email at info@BrazielLaw.com or call (912) 351-9000.

 

We are a debt relief agency. We help people file for bankruptcy relief under the U.S. Bankruptcy Code.

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Living With The Stress of Debt vs. Bankruptcy

Have you fallen behind on your bills? Is your phone ringing off-the-hook with harassing phone calls from creditors? Have you been served a lawsuit? Is the stress from your massive debt and missed payments keeping you up at night?

Often our clients come to us feeling completely overwhelmed. We understand that financial problems and the accompanying collection actions cause extreme stress.

You do not have to live with the stress of debt.

The choice is yours. You can continue to live under the debilitating weight of debt, or you can choose a debt relief option that is right for you and your family. There is light at the end of the long debt tunnel.

If you are exploring debt consolidation, read our article Why Debt Consolidation Rarely Works for more information.

To be certain, filing for bankruptcy is not an easy decision for anyone. Though it can be the choice that gets you past this difficult time. Filing for bankruptcy can be the choice that gives you a clean slate and a fresh start.

If you are deciding between living with the stress of debt versus filing for bankruptcy, consider the following:

The Stress of Collection Actions Against You

It doesn’t take long before creditors become aggressive with their collection tactics. It begins with incessant collection calls. Law suits, wage garnishments, and bank levies are soon to follow. Collection actions cause stress. Even wondering if or when collection actions are going to happen can cause stress.

Bankruptcy can put an end to this stress. Bankruptcy stops all collection action. Once you file, it is illegal for any creditor to attempt to collect from you.

Avoiding Bankruptcy Is Not Helping Your Credit Score

We often hear from people that they want to avoid bankruptcy for fear of tanking their credit score. Consider this: if you’re thousands of dollars in debt and missing payments, your credit is already being adversely affected. While filing for bankruptcy lowers your credit score, it is still the better option for rebuilding credit than carrying forward unpaid debts, missed payments, and charged-off accounts.

Your Mental & Physical Health

The American Psychological Association found extreme financial stress to be associated with increased risk for a number of health problems, including heart disease, ulcers, diabetes, migraines, and sleep disturbances. It’s clear the weight of debt can affect more than your credit score.

You do not have to live with the stress of debt. Here at the Law Offices of Barbara B. Braziel we make sure you understand the benefits of bankruptcy and how filing with affect you and your family. We take the time to explain the bankruptcy process to our clients. We invite you learn more about our firm here and come meet with us for a free no-obligation consultation.

Reach out to us by email at info@BrazielLaw.com or call (912) 351-9000.

 

We are a debt relief agency. We help people file for bankruptcy relief under the U.S. Bankruptcy Code.

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Get Stress Relief: Stop Creditor Calls and Collection!

Have you fallen behind on your bills and now your phone is ringing non-stop with debt collection calls? Are you being harassed by calls from collection agencies? Does your stomach knot up every time you see a random (888) number pop up on your screen?

Did you know you have the power to stop collection calls yourself?

We want you to know your rights. There are laws in place to protect you from being harassed by creditors. No matter how much money you owe, or how far you’ve fallen behind on payments, nobody has the right to abuse you or mistreat you because of it.

The Fair Debt Collection Practices Act (FDCPA) is federal law designed to protect you and stop abusive, deceptive, and unfair debt collection practices. Even in the face of these powerful laws, many creditors still engage in illegal and abusive debt collection practices in violation of your rights under the FDCPA.

How to Stop Creditor Calls

Under the FDCPA, once you notify a collection agency in writing that you do not want to receive phone calls, they cannot legally continue to call you except under certain circumstances. If they continue calling, you have the right to sue them for violating your rights.

To get the collection calls to stop, follow these steps:

  1. Send the collection agency a letter telling them to stop calling you.
  • Send the letter by certified mail, so you have proof of delivery
  • Keep a copy of the letter
  • Do not provide any information the collection agency does not already have (such as your current address or phone number, name changes, etc.)
  1. Keep a record of everything.
  • Including letters, log of phone calls, voice mails, and notes on any conversations.
  • If you speak to a collection agency, make notes on what was said, and note the date, time, and agent’s name and employee ID number.

What to write in the letter:

To ensure the creditor understands you know your rights, use the following language in the letter:

This letter is to notify you in writing that I no longer wish to receive communication from you, including phone calls, in regard to the alleged debt. Pursuant to the Fair Debt Collection Practices Act § 805, 15 U.S.C. § 1692(c) you must cease all communication with me, family members, or my employer.

You may only contact me to notify me in writing of your intention to either pursue specific remedies or terminate collection attempts.

This letter is in regard to ceasing communication, and is not, and should not be construed as, an admission regarding any alleged debt.”

The Debt Still Exists Even If the Collection Phone Calls Stop

It is important to understand that even if the phone calls have stopped, the debt still exists. Even if they are not calling you, your creditors can take collection action against you, including suing you for unpaid debt.

Did you know bankruptcy stops all collection action, including law suits, wage garnishments, and bank freezes? To learn more, read our article here.

Certainly stopping harassing credit calls will help you get stress relief. However, we encourage you not to ignore or avoid your debt problems. We’re here to help you get out of debt. We even offer free consultations to anyone in Savannah, GA and all of the surrounding areas.

Follow us on Facebook for more tips to stop creditor harassment!

 

We are a debt relief agency. We help people file for bankruptcy relief under the U.S. Bankruptcy Code.

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Catch Up on Missed Mortgage Payments with Chapter 13 Bankruptcy

When the first of the month comes, and you do not have the funds to make your mortgage payment it is a difficult time. But missing a mortgage payment can happen to any home owner. At any time unexpected expenses can arise. Perhaps you or your spouse lost a job, reducing your household income in half. Or, you had to make an emergency trip up north to attend a memorial service. Maybe your child had an emergency that created thousands of dollars in medical bills.

When you miss one payment, it becomes difficult to catch up that payment while making your current payment, too. This can lead to penalty fees, and for many, it leads to many months of missed mortgage payments.

We understand that falling behind on your mortgage is emotionally taxing. We understand you’re afraid you will lose your home. We’re here to help. You have options that will help you make up those missed mortgage payments and save your home from foreclosure. Filing for Chapter 13 bankruptcy might be the solution for you and your family.

Chapter 13 bankruptcy empowers you to catch up on your missed mortgage payments.

 

How Chapter 13 Bankruptcy Helps You Catch Up On Missed Mortgage Payments 

Chapter 13 bankruptcy sets up a three to five year repayment plan to help you repay some or all of your debt. Your mortgage arrears (the amount you are behind on your mortgage) are included in the repayment plan. Each month you make a payment to the Bankruptcy Trustee assigned to your case, then he or she distributes those payments to your mortgage lender and other creditors you owe money.

The ins and outs of Chapter 13 can be complicated. Here at the Law Offices of Barbara B. Braziel we’ve filed thousands of successful Chapter 13 bankruptcy cases over the past 30 years. Call us right now (912) 351-9000  to schedule a free consultation.

 

Additional Benefits to Homeowners Who File Chapter 13 Bankruptcy: Eliminate A Second Mortgage 

In addition to catching up on mortgage arrears, you may also be eligible to eliminate a second mortgage. Eliminating a second mortgage is called a “lien strip.” This is literally stripping away a lien on your house, so that you are no longer liable to pay back the debt. Lien strips can only be applied to houses with two or more mortgages, with a first mortgage that is under water.

An underwater mortgage means that the current fair market value of the house is worth less than the amount owed on it. The following illustrates when a lien strip is possible:

Current fair market value of the property: $100,000

Amount owed on the first mortgage: $125,000

Amount owed on the second mortgage: $50,000

Under these facts the home is considered under water because the value of the home is $100,000, which is $25,000 less than the amount owed on the first mortgage. In this case, a lien strip of the $50,000 second mortgage would be possible at the conclusion of the Chapter 13 repayment plan.

This means the homeowner would not have to pay back the $50,000 second mortgage, and once the first mortgage of $125,000 is paid off in full, the homeowner would own the house free and clear.

 

Chapter 13 Bankruptcy Is A Powerful Tool for Homeowners

Have you fallen behind on your mortgage payments? Are you facing a foreclosure of your home? Is your house underwater? If so, Chapter 13 bankruptcy may be the tool to save your home and give you the financial freedom that you need.

If you have fallen being on your mortgage payment, we are here to help. Together we will explore your options. Contact us today to schedule a free consultation.

The Law Offices of Barbara B. Braziel proudly serve people in Savannah, GA and the surrounding areas.

 

We are a debt relief agency. We help people file for bankruptcy relief under the U.S. Bankruptcy Code.

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Five Bankruptcy Myths Dispelled

Even after 30+ years of practicing bankruptcy law, we never cease to be amazed at how many bankruptcy myths are believed by most people. Misinformation about bankruptcy abounds. In nearly every free consultation, we dispel at least one bankruptcy myth.

People come to us worried that someone will come take all of their belongings if they file for bankruptcy, or that they’ll never be able to get credit or take out a loan again. Both of these are far from the truth.

In an effort to help people better understand what bankruptcy is (and isn’t), we’ve compiled a list of five bankruptcy myths we often hear.

 

Bankruptcy Myth 1: Someone will come take all of my stuff.

The truth is most debtors (people who file for bankruptcy) get to keep most or all of their personal belongings. The U.S. Bankruptcy Code, as well as the state of Georgia, carves out exemptions that can be used in Chapter 7 or 13 bankruptcies. Exemptions allow for your property and belongings to be protected through bankruptcy, up to a certain dollar amount. Exemptions are available for your home, car, personal belongings, retirement accounts, and other assets.

If something is “exempt,” it cannot be taken by your creditors or by the bankruptcy trustee to pay back your creditors. View a full list of Georgia exemptions here.

Note that if you file a joint bankruptcy with your spouse in Georgia, you can double the exemption amounts to protect even more of your assets and belongings. If you file for bankruptcy, nobody is coming to take all of your stuff.

 

Bankruptcy Myth 2: I will never be able to get a loan again.

After bankruptcy people are able to get loans, including car loans, mortgages, and lines of credit.

While bankruptcy does lower your credit score, many people find their credit score begins to recover fairly quickly out of bankruptcy. Prior to filing their credit was taking  a hit each month with late payments and increasing debt loads. After filing, they have little to no debt, making their debt to income ratio favorable. Which makes them a viable candidate for a loan or line of credit.

Filing for bankruptcy may temporarily limit your access to credit, or force you to pay higher interest rates for credit you do get. Though many of our clients find that the relief of getting out of debt far outweighs this concern.

 

Bankruptcy Myth 3: Paying off my debts is better than filing bankruptcy.

To be certain, filing for bankruptcy is a serious financial decision, but that does not mean it is a bad decision. If you can reasonably pay back your debts, then you should. But if you cannot reasonably pay back your debts in two years, then filing for bankruptcy may very well be the better option.

Bankruptcy stops harassing creditor phone calls, collection action, lawsuits, wage garnishments, and erases most debts. Bankruptcy brings relief and a fresh financial start.

 

Bankruptcy Myth 4: My financial future will be ruined by bankruptcy.

No, this is not true at all. For many people, filing for bankruptcy is a good decision for their financial future.

If paying back your debts will take years, and include massive amounts of interest, or late-payment penalties, then erasing debts with bankruptcy is a wise financial choice. Those years of payments can be directed to savings, investments, and retirements accounts, all of which better your financial future.

Also, most retirement accounts, including your 401(k), IRA, and other retirement accounts are protected in bankruptcy.

 

Bankruptcy Myth 5: Only failures file for bankruptcy.

Bankruptcy is a financial remedy, nothing more. It does not speak to your character, or your morals or ethics. Bankruptcy is your legal right. It does not mean that you are financially irresponsible.

Instead of viewing bankruptcy as a failure, we encourage you to see it for what it really is: a powerful tool that can help you take control of your finances.

 

We Offer Free Consultations

Meet with us for a free, no-obligation consultation. Call us at right now at (912) 351-9000, or email info@BrazielLaw.com. We are here to give you real information about your rights and how bankruptcy can help you.

We are proud to serve people in Savannah, Richmond Hill, Hinesville, Pooler, Port Wentworth, Tybee Island, Clyo, Ellabel, Midway, Springfield, Pembroke, Brooklet, Garden City, and Ludowici Georgia.

We are a debt relief agency. We help people file for bankruptcy relief under the U.S. Bankruptcy Code.

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