Once again, the misinformation about bankruptcy permeates the world wide inter-webs like a smelly fart on a school bus in the summery humid weather like we’re having here today in Boston. But since analyzing this “information” is almost like shooting fish in a barrel, I’m able to take some time and again grade this really bad article entitled: “How Do I Qualify for Bankruptcy?”
The first introductory paragraph is fairly innocuous, so I’ll get right to the first step:
“Qualifying for Chapter 7 Bankruptcy”
Step 1: · Participate in a federally approved credit counseling program. You must complete this class within 6 months before you file for either Chapter 7 or Chapter 13 bankruptcy.
I preface my comments by warning that this will come across as being hyper-technical. But bankruptcy is technical…as is any code based law.
To be a debtor, you must complete a course in credit counseling from a US Trustee Program Approved credit counselor within 180 days of the filing. 6 months is not 180 days. For example, six months after June 1 is December 1. But 180 days from June 1 is November 29. If you have the certificate on June 1, and you file on December 1, you will have filed with an expired certificate and be subject to dismissal. Also, if you go to a credit counselor who is not a US Trustee Approved provider of prepetition credit briefings, you cannot be a debtor.
Answer category: F
Step 2: Compare your monthly income to the median income of your state. If your monthly income is less than your state’s median income level, you qualify for Chapter 7. If not, proceed to step 3. See “Resources” for a link to the federal government census site to compare your income.
Actually, you have to use “Current Monthly Income” which is not current, not monthly and not income. In short, it’s the 6 calendar months of income but for a complete and accurate description, see Section 101(10A) of the Code. More importantly, just because you fall under the median income, doesn’t mean you “qualify” for a chapter 7. It also doesn’t mean you should file a chapter 7 petition….since you might benefit more from a chapter 13 filing.
Answer category: F
Step 3: Calculate your net income. Subtract your monthly expenses from your current monthly income. Multiply this number by 60.
Ok – now it’s speaking about “current monthly income.” If you’re over the median income, you do subtract your monthly expenses in one section of the filing, but in another, you need to subtract the “allowances” on the “Means Test” form. “Allowances” are not necessarily the monthly expenses. The answer doesn’t mention allowances.
Answer category: F
Step 4: Compare your net income to the Chapter 7 standards. If your net income is less than $9,999 and is not more than 25 percent of your debt, you qualify for Chapter 7 (as of 2010).
Since I’m not sure how “net income” is actually defined here (whether it be from the means test, which is not mentioned at all, or Schedules I and J), unfortunately, this answer fails.
Answer category: F
“Qualifying for Chapter 13 Bankruptcy”
Step 1: Participate in a federally approved credit counseling program. You must complete this class within 6 months before you file for either Chapter 7 or Chapter 13 bankruptcy.
See my response above. Repeat Fail.
Answer category: F
Step 2: Compare your monthly income to the median income of your state. Your monthly income must be higher than median income level of your state to qualify for Chapter 13. See “Resources” for a link to the federal government census site to compare your income.
Again, no – totally not true. Under median debtors can qualify for a chapter 13, and depending on your circumstances you may want to be in a chapter 13. So this answer is another failure.
Answer category: F
Step 3: Calculate your net income. Subtract your monthly expenses from your current monthly income. Multiply this number by 60.
See answer above. Read Section 1325(b). Better yet, don’t rely on half-baked instructions from someone who clearly doesn’t know what they are taking about.
Answer category: F
Step 4: Compare your net income to the Chapter 13 standards. If your net income exceeds $9,999, you can file for Chapter 13. If your net income doesn’t exceed $9,999, but your net income is greater than 25 percent of your debt, you can also qualify for Chapter 13 bankruptcy.
Huh? I’ve read this a few times and it’s making my head hurt. Net income? What about projected disposable income? What about 0 % plans? What about cram-downs? My head-ache is getting worse. I am so happy it’s Friday.
Answer category: F
This one was a complete failure. There’s a lot of bad bankruptcy information out there. Don’t believe everything you read – because anyone who would read this article and believe they qualify for a chapter 7 or 13 is not getting the information they really need – and may be in for more disappointment than their debt has already brought them.
Related posts:
- Do It Yourself Chapter 13: The Road To Failure
- Filing Bankruptcy: Timing can be Everything in Chapter 13
- Storm Preparation: Payment Advices
- Median Income Figures Adjusted
- Still Thinking About Credit Counseling?
Tags: Means Test, US Trustee
[...] This post was mentioned on Twitter by Jacob Simon, McLeod Law Offices. McLeod Law Offices said: Another Road to Failure: How Do I Qualify for Bankruptcy? http://ht.ly/1Uoyk The web misinformation is making me crazy…or creative
[...]