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Little-Known Facts About Chapter 7 Bankruptcy in Fairfax VA

Long-term illness or unemployment can devastate personal finances. The majority of workers have little to no emergency savings set aside for such misfortunes. Usually, this is due to low wages and high expenses. Eventually, expenses begin to exceed income. When you’re not just struggling to stay afloat, but drowning in debt, it’s time to think about alternatives such as Chapter 7 Bankruptcy Fairfax, VA.

A lawyer should consider your qualifications for bankruptcy, and decide which type is right for you. Your “actual budget” will be calculated, which compares income to expenses. To qualify for Chapter 7 bankruptcy in Fairfax VA, your net income may not exceed your reasonable expenses. A little-known fact about bankruptcy is that unsecured debts will not count towards your “reasonable expenses”. In other words, if you want to file Chapter 7 bankruptcy, your actual budget should show that you’re struggling with everyday expenses, not just credit card balances or medical bills.

Another little-known fact is that you must also pass a means test to qualify for Chapter 7 bankruptcy. Your earnings must not exceed the state median income. That is, you can’t make more money than most other people in the state. Also, you must be unable to pay at least 25% of your non-priority unsecured debt. Basically, if you make too much money, or your money problems are exclusively related to unsecured debt, you may have to file for Chapter 13 bankruptcy. This is similar to debt consolidation.

The most important little-known fact about Chapter 7 bankruptcy concerns your home. Chapter 7 is not for homeowners who have no equity in their property, or are behind on their mortgage payments. Though filing for Chapter 7 bankruptcy will stop foreclosure, the bank can have your “automatic stay” lifted to proceed with selling your home. Chapter 7 also cannot stop eviction if you’re behind on rent. If you already own your home or are current with your mortgage or rent, then you will be protected. Otherwise, you can opt to file Chapter 13 bankruptcy, which will help you get current on your payments.

It’s important to know the facts before asking your lawyer about Chapter 7 Bankruptcy Relief Fairfax. If you are a low or middle-wage earner who owns a home or is current with his mortgage or rent, filing for Chapter 7 bankruptcy may be right for you.

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