Hire a Bankruptcy Attorney in Bessemer, AL to File for Chapter 7 Protection

The 2005 Bankruptcy Abuse Prevention and Consumer Protection Act changed the way people file for bankruptcy in the U.S. Under old rules, most could choose from chapter 7 and chapter 13, and many went for chapter 7 because it allowed almost complete elimination of debt. However, the new laws kept higher-income filers from using chapter 7. Here, readers can learn when and if they’ll be able to file for chapter 7 bankruptcy protection.

Is Chapter 7 Still an Option?

To determine whether one is still eligible to file for chapter 7, they and their bankruptcy attorney in Bessemer, AL must assess their monthly income, as an average, over the past six months. Compare that figure to the median income for the state. If the filer’s current income is less than the state median, they can file for chapter 7. If not, the person must take the means test.

The Bankruptcy Means Test

The means test is done to determine whether a filer has sufficient disposable income to follow a chapter 13 repayment plan. To take the means test, the filer subtracts certain allowable expenses from their current income, and the resulting total is disposable income. If the figure is under $100, the filer qualifies for chapter 7. Those with disposable income over $166.66 must accept chapter 13.

How the New Bankruptcy Laws Change Property Valuation Methods

Under chapter 7, property was valued for what it would go for at auction. Under new laws, property is valued at its retail cost. This change means that more debtors will likely have property taken and disposed of by trustees to pay debts. If one is unsure of how much property they’ll get to keep, a bankruptcy attorney can help them safeguard as many assets as possible.

Does a Filer Always Need a Bankruptcy Attorney?

Filing for a bankruptcy is an emotional and difficult decision with many complicated, and sometimes embarrassing, issues. Local bankruptcy attorneys with Forstman & Cutchen, LLP know the new laws, and they can help filers through this tough time by explaining their legal options and finding the right course of action. By hiring a bankruptcy attorney in Bessemer, AL, a filer can protect their rights and some of their assets.