If you find yourself needing to file bankruptcy and you don’t qualify for a Chapter 7 under the means test, you still have debt relief options. There are a few options available depending on your overall situation. If you simply have unsecured credit card debt and you have not received a summons you might want to try to negotiate with your creditors to settle some debts. Or, you might consider Chapter 13 bankruptcy.
Chapter 13 Bankruptcy
If you don't qualify for Chapter 7 because your income is too high, you may be able to file for Chapter 13 bankruptcy. (Learn how Chapter 13 bankruptcy works.)
If you have a few credit cards with high balances and want to avoid bankruptcy all together a bankruptcy attorney may be able to negotiate a cash settlement if you have some money saved up to offer the creditors. If you are exploring this route, beware of debt settlement scams.
Getting Around the Means Test for Recent Income Changes
In California we see a lot of consumers trying to squeeze into Chapter 7 bankruptcies because their income is high. A good bankruptcy attorney is like a good CPA. Bankruptcy attorneys can assist you with bankruptcy pre-planning and help you qualify for a Chapter 7. For example, if your income ove the previous six months is too high to qualify you under the “means test”, and you recently suffered a loss of income, then with pre-petition planning and creditor defense you can wait a few months and qualify for a Chapter 7 bankruptcy. (Learn more about the Chapter 7 means test.)
Dealing with Creditor Harassment and Collection
It’s best to consult a bankruptcy attorney right away if you are seeking debt relief to avoid judgments, liens, bank levies and wage garnishments. Typically, your bankruptcy attorney can help fend off creditors that are harassing or trying to intimidate you into paying them. This can be the difference of being able to delay filing bankruptcy until you can qualify for a Chapter 7, rather than being forced into a repayment plan to avoid repossession or wage garnishment.