There are two things to be aware of with respect to a Chapter 7 bankruptcy:
1. In theory, you give up property in a Chapter 7 bankruptcy.
From a practical standpoint, it generally does not occur because most people do not have enough value or equity in their property. Whatever value or equity there is in the property is normally protected by claiming exemptions available under the law.
For example, on January 1, 2021, an individual could protect $145,425 of equity in his or her home. Few debtors have this much equity in their home. Therefore, assuming they are current in their payments, most debtors do not need to be concerned about losing their home in a Chapter 7 bankruptcy. The same typically holds true for a vehicle.
Income tax refunds can be considered the most common type of property that is turned over in a Chapter 7 bankruptcy. The timing of the bankruptcy can be an important factor in protecting a person’s tax refund. In order to protect your tax refund in the bankruptcy, Mary Lou Burns takes the time to weigh this factor and discuss with you the best possible way to avoid having to turn over your tax refund in the bankruptcy.
2. In order to qualify for a Chapter 7 bankruptcy, the Debtor must meet certain income eligibility requirements.
One of these is the Means Test. This involves comparing your annual income to the median income in Ohio for your household size. For purposes of the Means Test, your annual income is calculated by multiplying your most recent 6 months of income by 2.
When your annual income exceeds the Median Income in Ohio for your household size, it is assumed to be an abuse to file a Chapter 7. We must then do further testing under the Means Test to determine if you qualify for a Chapter 7 bankruptcy. This process is more involved and time consuming, and factors in several variables.
Attorney Mary Lou Burns takes the time to analyze the client’s situation and does her best to get her clients qualified for a Chapter 7 bankruptcy. Fortunately, many people can still qualify for a Chapter 7 bankruptcy, even if their annual income exceeds the Median Income for their household size. If you cannot qualify for a Chapter 7 bankruptcy, you may still get relief from your debts by filing a Chapter 13 bankruptcy.
MARY LOU BURNS
Attorney Mary Lou Burns is passionate about helping people during a difficult period in their lives. She believes in treating her clients with dignity, respect & compassion throughout the process. Mary Lou gives each case the personal attention to detail it deserves, helping Clients get their financial fresh start for 20 years. Attorney Mary Lou serves the Greater Akron & Canton area, including Medina, Portage, And Wayne Counties.