If your hands are tied and you must declare bankruptcy, you may feel preferential toward Chapter 7 bankruptcy. This is because this bankruptcy type may immediately relieve you from the responsibility of your hefty debts, and you may not have that many assets that you feel particularly sad about parting ways with. However, it is not so much that you get to choose filing for Chapter 7 over Chapter 13 bankruptcy, but it is a matter of being eligible to file for the former. With that said, please continue reading to learn whether you can choose to file for Chapter 7 bankruptcy and how an experienced Louisville, Kentucky Chapter 7 bankruptcy lawyer at Schwartz Bankruptcy Law Center can help you better understand your eligibility.
Can I choose to file for Chapter 7 over Chapter 13 consumer bankruptcy?
Simply put, you may choose to file for Chapter 7 bankruptcy so long as you can demonstrate that you pass its means test. Specifically, this test shows that your current annual income falls below the average for your household size in the state of Kentucky. These rates are generally updated every six months. But for cases filed within the November 2024 to March 2024 period, these rates were as follows:
- If you are a single earner: your annual income must be $61,551 at most.
- If you have a two-person household: your annual income must be $80,399 at most.
- If you have a three-person household: your annual income must be $91,268 at most.
- If you have a four-person household: your annual income must be $111,876 at most.
- If you have more than four people in your household: your annual income must be $111,876, plus $9,990 per additional household member.
Otherwise, the Kentucky bankruptcy court may believe you earn enough income to manageably participate in the repayment plan in a Chapter 13 bankruptcy case. This is unless you can offer additional calculations of your total debts and highlight how they significantly outweigh your annual income. However, these special circumstances do not guarantee you will get the greenlight for a Chapter 7 filing.
Should I choose to file for bankruptcy independently or jointly?
Once you settle whether you qualify for Chapter 7 or Chapter 13 bankruptcy, you must consider whether to file independently or jointly with your spouse. We may advise you on one over the other based on your unique set of circumstances. For example, if you and your spouse share a lot of joint debt, filing jointly may make the most sense to get double the exemption amount for certain exempt assets.
However, say your spouse owns a lot of separate assets acquired from before your marriage. Then, say that most of these assets are ineligible for bankruptcy exemptions. Well, if you do not want your spouse to sacrifice the assets they worked so hard for, you may want to spare them and selflessly file independently instead.
Before entering these proceedings, you should have already hired a skilled Louisville, Kentucky consumer bankruptcy lawyer to represent you. So, if you have not done so already, please contact Schwartz Bankruptcy Law Center today.
