Every personal bankruptcy is different. That’s why bankruptcy attorneys use phrases like “in most cases” or “under most circumstances.” Everyone’s debts – and everyone’s ability or lack of ability to pay them – is different, and each bankruptcy filing is scrutinized thoroughly by the bankruptcy court. For example, for most people in most cases, student loans cannot be discharged through bankruptcy. However, in some cases, having student loan debt will allow you to file a Chapter 7 bankruptcy, which discharges most of your “unsecured” debt, rather than a Chapter 13 bankruptcy, which requires you to develop and follow through on a plan to pay off unsecured debt over three to five years. If you’re already confused, that’s only the start of what you’ll need to know if you choose bankruptcy, so contact an experienced Dallas bankruptcy attorney right away. Your attorney will explain the bankruptcy process step-by-step and guide you through it successfully.
In 2005, Congress added a means test to the personal bankruptcy process to ensure the system is not abused by persons discharging debts they can afford to pay. The test disqualifies high income debtors from Chapter 7 if they can afford a repayment plan under Chapter 13. Congress also created the business exception. If the individual debts are primarily “business” debts, no means test is required, and the debtor is not disqualified from filing a Chapter 7 bankruptcy.
Here’s where it gets complicated, and here’s why each bankruptcy involving student loan debt is closely scrutinized. If the student loan money was used to obtain a certification or a degree to improve one’s job skills and one’s ability to find better employment, the bankruptcy court may consider the student loan a business debt, and if the student loan debt amount is high enough, the means test can be waived. Other debts incurred with what the courts call a “profit motive” may be considered business debts as well. A good bankruptcy attorney can assess your situation and help you determine if bankruptcy is right for you, if Chapter 7 or Chapter 13 is right for you, and whether you’ll be required to take the means test. If you are sinking deeply in debt in the Dallas-Fort Worth area, make the call today and arrange to speak with an experienced Dallas bankruptcy attorney.