The Means Test In The Bankruptcy Law

As credit card issuers continue to raise fees, interest rates and payment requirements a growing number of struggling card holders are being force to consider options for debt relief. For many, the choice can come down to two options; bankruptcy and debt settlement. Each has advantages depending on the personal circumstances of the consumer. Let’s take a look at bankruptcy first:

Chapter seven - The court appoints a trustee for a debtor who has filed a petition underneath this bankruptcy chapter. This option is also termed 'liquidation of assets' as this trustee liquidates some of the debtor's assets to pay off the collectors. A debtor gets to maintain his exempt property, if any.

New York law provides that the court's orders as well as the first and second mortgage, act as liens against the property. This means that when the court decision has been made against the client, it works against them as a real estate lien, together with the mortgage, or Home equity line of credit ("HELOC") a lien on the property. Such as act to protect the debt, which must be paid at the time when the country sells or refinances their home.

There are several chapters to the bankruptcy code. Each has some advantages as well as disadvantages. Some relate only to specific situations, such as Chapter 12 that applies only to farmers trying to save their operations. It is important to choose the correct chapter before filing, as it can be expensive to convert from one chapter of the code to another.

Many people question whether or not it is best to file for bankruptcy before or after the divorce. This is a complicated question and a qualified attorney can provide you with legal advice regarding what the best choice is for your situation. Often, couples will file for bankruptcy together before filing for divorce, especially if the debt is in both names. However, if you believe your spouse is consulting with an attorney regarding both divorce and bankruptcy, it is crucial that you secure your own legal counsel immediately. Working closely with an attorney will ensure that certain shared assets are protected and you don't end up on the losing end.

If you're ever deep indebted and now have exhausted all other possible options then filing for bankruptcy might well be your only choice for financial salvation. Whether or not filing for bankruptcy is the best choice for you varies according to several factors. These include your age, the volume of your dependents, how large your debt, what money you have saved for retirement, and the sum of the non-dischargeable debt. These factors will all play into how your bankruptcy case will likely to be handled.

You may only know bankruptcy as some nebulous thing that helps get rid of debt, but that's not all there is to it. The first thing you should know about bankruptcy is that it is a process that can take you in 2 different directions. While the overall goal is to help relieve the pressure of debt, each type of bankruptcy has a different impact and a different outcome. Chapter 7, the type most people know of, is a process of debt erasure. Using asset liquidation and careful mathematics, you can erase all of your debt except any you owe to the IRS and student loans. Chapter 13, on the other hand, is a process similar to debt consolidation. Using mathematics and an intermediary called a Trustee, you can calculate a monthly amount of money you can afford to pay and distribute it among your secured creditors. An attorney can help you understand which type you need and help you file.