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Settling Credit Card Debt in Chapter 7 Bankruptcy

Posted by attorney Christopher Migliaccio

Settling credit card debt is on the minds of many Americans, although the latest Quarterly Report on Household Debt and Credit from the Federal Reserve Bank in New York found that consumer credit card balances ($672 billion) are at their lowest level since the second quarter of 2002.

Nevertheless, those who are in debt may erase some of their debt through filing for Chapter 7 bankruptcy. By filing for this type of bankruptcy, individuals can clear certain debts in their name and start anew. If you’re considering filing bankruptcy to settle your debts, contact a Plano Chapter 7 bankruptcy attorney today to learn more.

About Chapter 7

Chapter 7 bankruptcy is designed to help eliminate unsecured debts. This may prove helpful for those interested in settling credit card debt, loans, utility bills and medical costs. There are some types of unsecured debts that you cannot have dismissed as part of Chapter 7 such as:

· child or spousal support;

· student loans (except in some cases);

· debts on fraudulent credit cards;

· debts because of bad checks; and

· some tax debts.

If you are thinking about settling credit card debt by filing bankruptcy, call a Plano Chapter 7 bankruptcy attorney today. A legal professional can help determine which of your unsecured debts may qualify to be discharged. If you are at the point where you need to just start over, get the process going as soon as you can so that you can begin your new life.

Qualifying for Chapter 7 Bankruptcy

You must meet a few requirements in order to qualify for Chapter 7 bankruptcy in the state of Texas. First, you must undergo credit counseling. Your credit counseling must be completed within six months before you intend to file, and it must be taken through a state-approved program.

During the counseling session, you will go over your debts, discuss budgeting and address alternatives to bankruptcy. After you’ve finished, you will receive a certificate and be able to move onto the next step of settling credit card debt.

Next, in order to file for Chapter 7 in Texas, you must have an annual income that is below the state’s median income, or you have to pass the means test. This compares your monthly income with your monthly expenses to determine if you are unable to afford paying off your debts.

In order to qualify for Chapter 7, the means test requires that after your monthly expenses, you have $100 or less in disposable income, or you have between $100 and $166.67 in monthly disposable income AND this income over 60 months will equal less than 25 percent of your unsecured debt. If you make more than $166.67 in disposable income each month, you may fail the means test and be unable to file for Chapter 7 bankruptcy.

Getting Started with Bankruptcy

Are you considering filing Chapter 7 bankruptcy? It can be confusing for those unfamiliar with the process, especially when evaluating whether you qualify. Call Warren & Migliaccio at 888-584-9614 to speak to a Plano Chapter 7 bankruptcy attorney about settling credit card debt today.

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