When You Should KISS in Bankruptcy

Most of us have heard the old adage, keep it simple stupid. We use the acronym, KISS, to illustrate the point. The adage means we should keep things as simple as we can because the more complicated things become, the more likely mistakes and problems will arise. With complicated bankruptcy laws, when is it a time to KISS in bankruptcy?

In bankruptcy, the fewer assets you own the easier it is to keep it simple. Chapter 7 Bankruptcy is the simplest and quickest type of bankruptcy. Chapter 7 Bankruptcy, commonly called a “liquidation bankruptcy”, is available to individuals, married couples, corporations, and partnerships. For the Chapter 7 Bankruptcy a court-appointed trustee gathers and sells your non-exempt property and uses the proceeds from the sale to pay your creditors.

Most Chapter 7 Bankruptcy cases are “no-asset” cases and the debtor will not have any non-exempt property for the trustee to sell. There is a thin line between being collection proof and having a no-asset case. If you live in a state that allows you to have more exempt property, you most likely can have a no-asset case and still not be collection proof. For instance, living in a state that allows garnishment of wages may give you good cause for filing for protection even if you do not have any other assets to collect.

You can qualify for Chapter 7 Bankruptcy if your income is equal or under the median income for a family of your size in your state. If your income is above the median income you can still qualify if you pass the means test.

Means testing refers to the eligibility for relief for debtors who have sufficient financial means to pay a portion of their debts. To keep it simple, a Means Test calculator is provided to the debtors who are above the median income in their state, and it includes a formula designed to keep filers with higher incomes from filing Chapter 7 Bankruptcy. Although a complicated formula, the bankruptcy means test is rather generous and many debtors have no trouble meeting its requirements.

Filing for Chapter 7 Bankruptcy protection has some advantages including:

  • Chapter 7 Bankruptcy can bring debtors faster and greater relief. Only 5% of Chapter 7 cases involve asset liquidations because most filers have few assets that courts are interested in seizing.
  • Chapter 7 Bankruptcy stays on credit records longer, but they often make filers better credit risks because they do not carry ongoing payments.
  • Chapter 7 Bankruptcy is cheaper. The national average to file for Chapter 7 bankruptcy is approximately $1000.
  • Success rates of getting a discharge without distribution are by far much greater in Chapter 7 Bankruptcy than Chapter 13 Bankruptcy. Some 60% of Chapter 13 Bankruptcy cases are dismissed because clients fall behind on their payments.

Filing Chapter 7 Bankruptcy is the simplest way to discharge debt. If you really want to KISS when you are ready to file, you will most likely need a bankruptcy lawyer to help you keep it simple.

If you need relief from the stress of debt and you live in or around the metropolitan area of Newark, New Jersey, contact us at www.betterbankruptcy.com .We will help you find a bankruptcy attorney in your area who will answer your bankruptcy questions.

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