In today's Internet age it seems there is a formula for figuring out just about everything. When it comes to filing bankruptcy, technically there's nothing written in stone but there are some strong opinions of when to pull the trigger. Searching the Internet for help is a start, but the best place to get an answer is to speak with a bankruptcy attorney. The problem is, there are many factors involved in filing for bankruptcy and with those factors there are many different opinions of how to get the results. Cruising the Internet for information can be very educational to help the individual that's considering bankruptcy create a few questions to ask a bankruptcy attorney. Being prepared to get answers to those plaguing questions will help a debtor made a decision on whether or not to file bankruptcy.
It will be nice if there was a set in stone formula where someone can just plug the numbers in and say you need to file for bankruptcy. Although that would be nice it's not that easy. Some people think that it's a sheer number of how much the consumer has that makes them a candidate for a bankruptcy filing. Just because a debtor has a large amount of debt, doesn't necessarily mean they cannot afford to pay it. If someone's income is high enough they might be able to afford the payments of $100,000 in credit card debt. One factor that many people use is the debt to income ratio to help them make the decision to file. But that doesn't necessarily mean that bankruptcy is in the future either. It could depend on the amount of interest they are paying on the debts. So considering this, the debt to income ratio doesn't always work either.
That goes back to the idea of going and visiting a bankruptcy attorney to get their advice to simplify the whole matter. What a bankruptcy attorney typically looks at for their magic formula is basically a calculator and a pile of bills and compares it against the individual's net income. In fact, this is the information the bankruptcy court will want to see to qualify a person to file Chapter 7 bankruptcy. First of all, the individual filing for bankruptcy needs to show their net monthly income for their household. This includes the spouse's income if the spouse is working. Even if an individual is filing for bankruptcy as an individual, the spouse's income will have to be included. Next, the debtor will have to add up all their monthly payments separately. After that, the person will need to total up all their monthly living expenses including rent or mortgage, car payment, groceries, utilities, clothing and everything else. Now this is how the magic formula works. If the individual's net monthly income, after deducting the payments that they pay on their debts, leaves the debtor with not enough money to pay for their living expenses, they are a good candidate for filing bankruptcy.
Actually qualifying filing Chapter 7 bankruptcy is a little more complicated than that since the bankruptcy code changes in 2005. It's not only the fact that you can't afford to make your payments, but the debtor filing for bankruptcy is also limited on the amount of income they can make. The debtor filing bankruptcy will need to make close to or less than the median household income for their state. If the debtor makes too much money, they will need to file Chapter 13 bankruptcy. With this added twist to a bankruptcy filing, a bankruptcy attorney has become an invaluable asset. There is no formula per se for filing bankruptcy and that's why it's advisable to sit down with a bankruptcy attorney for consultation to discuss the debtor's individual financial situation.
It will be nice if there was a set in stone formula where someone can just plug the numbers in and say you need to file for bankruptcy. Although that would be nice it's not that easy. Some people think that it's a sheer number of how much the consumer has that makes them a candidate for a bankruptcy filing. Just because a debtor has a large amount of debt, doesn't necessarily mean they cannot afford to pay it. If someone's income is high enough they might be able to afford the payments of $100,000 in credit card debt. One factor that many people use is the debt to income ratio to help them make the decision to file. But that doesn't necessarily mean that bankruptcy is in the future either. It could depend on the amount of interest they are paying on the debts. So considering this, the debt to income ratio doesn't always work either.
That goes back to the idea of going and visiting a bankruptcy attorney to get their advice to simplify the whole matter. What a bankruptcy attorney typically looks at for their magic formula is basically a calculator and a pile of bills and compares it against the individual's net income. In fact, this is the information the bankruptcy court will want to see to qualify a person to file Chapter 7 bankruptcy. First of all, the individual filing for bankruptcy needs to show their net monthly income for their household. This includes the spouse's income if the spouse is working. Even if an individual is filing for bankruptcy as an individual, the spouse's income will have to be included. Next, the debtor will have to add up all their monthly payments separately. After that, the person will need to total up all their monthly living expenses including rent or mortgage, car payment, groceries, utilities, clothing and everything else. Now this is how the magic formula works. If the individual's net monthly income, after deducting the payments that they pay on their debts, leaves the debtor with not enough money to pay for their living expenses, they are a good candidate for filing bankruptcy.
Actually qualifying filing Chapter 7 bankruptcy is a little more complicated than that since the bankruptcy code changes in 2005. It's not only the fact that you can't afford to make your payments, but the debtor filing for bankruptcy is also limited on the amount of income they can make. The debtor filing bankruptcy will need to make close to or less than the median household income for their state. If the debtor makes too much money, they will need to file Chapter 13 bankruptcy. With this added twist to a bankruptcy filing, a bankruptcy attorney has become an invaluable asset. There is no formula per se for filing bankruptcy and that's why it's advisable to sit down with a bankruptcy attorney for consultation to discuss the debtor's individual financial situation.
The author started DebtFreeBankruptcyAttorney.Com which is a website that helps individuals with debt problems by putting them in touch with a local bankruptcy attorney that specializes in filing bankruptcy under Chapter 7 and Chapter 13 bankruptcy. Check our website for more answers to bankruptcy questions and ideas on how to have a debt free future.
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