There Are Three Basic Factors if You’re a Good Candidate
Video Transcribed: I am Edward Kelley, a bankruptcy attorney in Tulsa, Ok for Wirth Law, finishing up our five video series on, Am I a Good Candidate for Chapter 7? So we recapped the income requirements and the debt requirements for Chapter 7 in the last video, and now we’ll wrap it up again with what factors make you a good candidate to complete your 7 successfully.
So it’s a pretty quick process from the date of filing, 90 days until you get your discharge. Have a little meeting of creditors, which currently due to COVID is by phone at 30 days, and then in the following 60 days, you’ve got to file any reaffirmations you want to file, like if you want to keep your vehicle, loan, and vehicle, et cetera. Then 60 days out, you automatically get that discharge. So the last question is, is there anything that’s going to prevent me from doing that?
The main factor is do you make too much or too little money to get through the last gauntlet? So there’s a concept in Chapter 7 that’s important: disposable income. So as I said, you don’t need to include social security or most VA benefits in your income for purposes of qualifying.
So you might make $50,000 a year in social security on top of your income, but you can pretend you don’t have that in terms of qualifying for a 7. But in terms of finishing it, that money comes back in as part of your disposable income.
So then we do a second calculation, call it the back end, where we see how much money you have leftover a month. The yardstick is you want ideally to come out between zero and $100 a month, and that’s not including the debts you got rid of because those are no longer a factor.
So you do include, of course, anything you kept. If you’ve got a house payment, car payment and you’re keeping those things, deduct away. That’ll help you. But if you end up with, well, let’s just say 12,000 in social security.
So 1,000 a month that we didn’t calculate. If you’ve got 1,000 a month left over, you’re not going to get through Chapter 7. They’re going to say, “Nope, you need to do a 13 and you need to pay that $1,000 a month into your creditors every month until everything’s paid off or until three years have passed in the case of a 7 qualified debtor, which we’ll talk more about in another video. But that’s going to be a problem for you.
The other side of that is if you don’t have enough money. This becomes a factor if you want to reaffirm things. Let’s say your car payment is 500 a month and you want to reaffirm that. But your disposable income is $5 a month. Therefore, you’re at a -500.
When you present that reaffirmation to the court, you have to tell them how much you have leftover and justify that you can afford it. If you can’t be based on the other things that you filed, you’re going to be denied. Although you may still get your 7, you can’t keep the vehicle. Or if you want to keep the vehicle, you may not get through the 7.
So again, to summarize. Three basic factors if you’re a good candidate. What’s your income, your household income? What kind of debt have you got? Are you going to run into any problems or are you just fine with the factors that will determine your success?
So hopefully this has been educational. As always, you can reach out to me at edward@wirthlawoffice, spelled just like the sign, or call me directly at (580) 478-3130. We’ll be back with another series next week. Have a wonderful rest of your day, and I’ll talk to you soon.