Don’t Qualify for Chapter 7 Bankruptcy? Here’s What You Can Do

For those who are struggling financially, consumer bankruptcy may be something to consider. Filing for Chapter 7 bankruptcy may provide a clean slate and a strategy to move forward to regain your fiscal freedom. However, in order to qualify for filing, you must pass something called the “means test,” which is a basic assessment of your debt and income. Many people of modest means will be able to file Chapter 7, but there are still many people who won’t pass the test. If you already know that you aren’t eligible for Chapter 7 bankruptcy, that doesn’t mean it’s the end of the line. There are still options available to you!

Depending on your unique circumstances, like how far into debt you are and if any legal action has been taken against you, you have a few things to explore. Here are some options to consider:

  1. Use some savings to pay off debts

It’s surprising how many people have a good chunk of cash in savings, but simply don’t want to use it to pay off debts like credit cards. Although it’s good to have some emergency money stashed away, remember that your credit cards are marking up your balances by nearly 30% in interest! Your money will go further to paying those off first, and saving more later.

  1. Look into debt settlement

If you have some high credit card balances or other similar debts, but feel like you’ll never pay them off at this rate, you may want to look into debt settlement. A professional debt settlement firm may be able to negotiate a better deal for you, so you can save yourself on interest and some on the principal as well.

  1. Explore Chapter 13 bankruptcy

For those with higher incomes and assets, bankruptcy may still be a viable option. Chapter 13 bankruptcy doesn’t require you to liquidate all of your assets, but provides a structured debt repayment plan to get you to financial freedom at last. Ask a Los Angeles bankruptcy attorney if you qualify for Chapter 13.

  1. Address debt collection harassment

One reason why people look into bankruptcy is because they’re being harassed by creditors, and just want the abuse to end. Things like wage garnishment, judgments, liens, and bank levies can be serious, but the threat of these shouldn’t make you think that bankruptcy is the only option. There are consumer protection attorneys who can put an end to the harassment, so you can make the best financial decision for you, whether that’s delaying bankruptcy or going another route.

Want to learn more about consumer bankruptcy or debt collection harassment? Reach out to us at Martin & Bontrager today for your free consultation!