If you make less than the median income for a family of your size, you have the right to file a chapter 7 bankruptcy case. People sometimes call the “straight bankruptcy.” In chapter 7 bankruptcy, you can eliminate or “discharge” most of your debts. You can keep your car if you keep your car payments up to date. If your car is paid off, you can still keep it in chapter 7 if we can protect it with exemptions. You can keep your house if you can keep your mortgage up to date. If you are fighting a foreclosure in state court, you’ll be able to carry on the foreclosure defense after you file for bankruptcy under chapter 7. If you make more than the median income, you are “presumed to be abusing” the system by filing chapter 7. At Lakelaw, we’ll do a means-test analysis to try to overcome the presumption of abuse so that you could file chapter 7 if that is your desire. There may be special circumstances allowing you to file a chapter 7 even if your income is above the median.
If your debts are not primarily consumer debts, you are probably eligible to file a chapter 7 case even if you otherwise would not qualify under the Means Test. Chapter 7 bankruptcy is frequently available to people who have had business failure or who have a great deal of investment real estate in foreclosure.