Abuse Of Chapter 7 Bankruptcy Filings: A Cautionary Tale

Posted on: 8 August 2018

As an adult, when you first hear about bankruptcy, you may view it as a godsend. It is going to help you get out of a lot of financial trouble. Yet, you have to be very careful about filing a Chapter 7 bankruptcy. You could be viewed as someone attempting to abuse the system. Before you speak to a bankruptcy lawyer and file for bankruptcy or start bankruptcy proceedings, you should read the following.

Your Current Monthly Income and the Means Test 

Each state has a "means test." This test examines your income to see where it falls in relation to what other people are making. If your income is more than the state median, then a means test is applied. The means test tries to determine if you are attempting to cheat your lenders and creditors while continuing to spend more than what you make in a year.

It compares how capable you are at paying your debts if you are not spending a ton of money on more goods. If the means test shows that you are abusing the bankruptcy system, the judge will throw your case out and not even consider your request for debt cancellation. Only your lawyer in your own state knows what those state median income numbers are; lawyers online or in another state cannot give you that information when they do not practice law in your state.

Filing Bankruptcy More Than Once

There are reasons why individuals can only file for bankruptcy every seven to ten years. Before this became part of bankruptcy law, some people would rack up a ton of debt every two years or so, file for bankruptcy, and keep what they had "scored" during their spending binges. The government put a stop to that.

Still, there are people who keep doing this, even though their ability to file for bankruptcy has been limited to a set number of years in each state. If you are considering filing for bankruptcy a second time in less than ten years, be aware that the judges presiding over your second bankruptcy may be the same one that presided over your first. In that case, the judge may have his/her suspicions that you are a "bankruptcy abuser," and may either throw your second bankruptcy out of court or take note and ma file notes that you have filed twice in a limited time period. A third filing in the next few years may be seen as "abuse," and your case thrown out.


Figuring Out My Finances

For years, I lived on the edge of a paycheck. I was always running out of money, wondering when I would be paid next, and hoping for extra bonuses. Unfortunately, one day my luck ran out, and I found myself without a way to pay my rent. My landlord wasn't patient with me, and I actually got kicked out of my place. It was devastating and embarrassing, but I knew that there had to be a way to repair my finances. I met with a bankruptcy attorney to talk with me about my debts, and she was incredibly helpful. After seven years, I was able to completely correct my credit, and it has changed my life. Check out this blog to learn more about bankruptcy.

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