When filing for Chapter 7 bankruptcy, you need to total up all of your regular monthly income and then deduct any expenses that the court requires. This will give you your disposable income. This will offer you an estimate of your monthly discretionary income, which you may put toward paying back your debts. Your disposable income is another factor that will determine whether you are eligible for a total discharge of your debt under Chapter 7 or whether you will be required to seek protection under Chapter 13 of the United States Bankruptcy Code.

What income is considered in this situation? This is a great question to ask if you are curious about the source of the money that you need to collect. It is derived through a wide variety of sources, such as paid work, self-employment, royalties, pensions, and social security, among others. When determining how much money you have available to spend, be sure to take into account any and all sources of revenue. Take your time and review your work thoroughly before turning it in so that you don’t overlook anything. It is of the utmost importance to ensure that you will be able to manage your payments going forward.

 

Using Deductions During the Chapter 7 Bankruptcy Process in Georgia

When going over your numbers, your deductions will be taken into consideration as part of the process. You are going to use the actual cost for some of your expenses. In the computation, we will compare the national and state standards based on information received from the government. These expenditures are the priority and should be paid before any other financial obligations. The following paragraphs provide further explanation of some expense examples.

Food Expenses

This includes both the meals you consume at home and the food you eat when you go out. Take note that this does not contain any goods that are not related to eating. Your total for food costs will not reflect the prices of non-food items that you buy at the supermarket, such as cleaning supplies and personal care items, for example.

When you add up the cost of the meals you eat outside the home, you have to include the gratuities you give to the people who serve you. Delivered foods, such as pizza, fall under the category of “food outside the home.” Additionally included are visits to both quick-service and full-service restaurants.

 

Expenses Relating to Clothing

This category contains footwear as well as any other articles of apparel that you buy for yourself or your children. If you are skilled with a needle and thread and sew your own clothes, these costs are included as well. Additionally, you are required to disclose any services that pertain to your apparel, such as dry cleaning or laundry. You can also record the costs of repairs and any money you have incurred related to accessories and any repairs that they may require in this category.

 

Housekeeping Needs

This area of expenses includes things like postage, cleaning and laundry materials, lawn and garden supplies, and other things that are required around the house in order for you to operate regularly. These are all things that are included in this category.

 

Personal Needs

The cost of your toiletries will fall under this category. This includes items such as shampoo, razors, and various other personal care supplies.

 

Miscellaneous Needs

As long as the requirements are met, this section should also address any additional needs that were not previously included. Things like ATM fees and the cost of materials for schools are examples of what might fall into this category.

 

Deductions From Actual Costs in Georgia

• Housing, in addition to utilities
• Expenses relating to travel
• Taxes
• Paycheck deductions made automatically
• Life insurance
• Payments implied by a judge’s order
• Childcare expenses
• The cost of healthcare

You need to have a conversation with your bankruptcy lawyer about these expenditures and deductions in greater detail. Verifying that your figures are accurate helps set you on the proper course toward achieving your financial goals.

 

Understanding Discharged Debt in Chapter 7 Bankruptcy

When determining whether or not you are eligible for Chapter 7, your income, spending, and income after deductions are all taken into consideration. The following is a list of debts that are routinely discharged when you apply for bankruptcy.

• Credit card debt
• Medical bills
• Loans to individuals and other forms of unsecured debt
• Unpaid utilities
• Telephone expenses
• Your own responsibility for obligations backed by collateral (this might include auto loans)
• Deficit amounts that remain following a foreclosure or a repossession
• Judgments from unpaid credit card debt, medical expenses, or other unsecured debt

 

Understanding Your Eligibility in Georgia

The procedure of determining whether or not you are eligible can be difficult to understand. Because of this, it is absolutely necessary to collaborate with a lawyer who is well-versed in bankruptcy law. Choosing an individual in whom you have complete faith and who has a track record worthy of respect may make you feel more at ease during a period that is otherwise fraught with anxiety.

In order to determine whether or not you are qualified, a test called a “means test” will be completed. This test uses the income requirements of your state as its basis. When preparing the paperwork for this test, your disposable income is one of the factors taken into consideration. Establishing your eligibility will also take into account the size of your family. There usually are two steps that you need to complete for this test.

 

Step 1

In this phase, it will be determined whether your household’s income is lower than your state’s median income. Gathering all of the documentation relating to your income over a period of time is necessary if you want to give yourself the best chance of being eligible for the benefit. As was just stated, it is imperative that you disclose every source of income you have. Being dishonest will only result in problems in the long term if it is continued. In most cases, the time frame must be at least six months long, although there are situations in which you might be required to provide a longer period of time. If you are interested in learning more about the median income in your state, you should know that the Department of Justice periodically gathers this data. Your legal representative ought to be able to give you the most recent information available.

It is essential that you mention any changes that have occurred within the scope of the time span covered by your documentation. You will want it to be recognized if you have been gainfully employed for the majority of the period, but you are not at the moment. You should also document the fact that you have taken a wage cut if you did so. The calculations can also be done in the opposite direction. Your attorney will want a notification if you have started new employment or obtained a pay increase since you last spoke with them.

If you determine that your income is lower than the state’s median income at the end of this phase, you won’t have to do anything else; the only thing you’ll have to do is file the bankruptcy paperwork. Even if your salary is far higher than the national average, you may still be eligible for Chapter 7 protection. Your evaluation will continue after this step, which is the next part of the test.

 

Step 2

When you are trying to gather your expenses for step two, you will use the same time range you used in step one. Again, double-check that everything on your list is correct and comprehensive. You can better grasp qualifying expenses by referring to the list provided. If you have questions, it’s vital to ask. These costs will be totaled up and logged under the heading of permissible expenditures. Your discretionary income is the sum arrived at after adding up all of these numbers.

Your disposable income is the amount of money that you have available to put toward paying down your obligations. It is not unusual to discover errors while you are calculating your expenditures. It is simple to feel overpowered by the process at this point in time because this is most likely a stressful period for you. Taking your time and carefully going over your numbers several times is really necessary because of this. When you find out later in the process that you forgot something important, it can delay the filings or even need you to start the procedure over completely. The very last thing you want is for the documentation to give the appearance of being fraudulent and to draw additional attention to itself.

Your lawyer will only be able to assist you to the extent you allow them to. If you do not give them all the information, they will only be able to provide limited assistance. The evaluation is considered to be finished when all of the documentation has been counted. If your discretionary income is less than the median, you may be eligible for Chapter 7 bankruptcy protection.

 

Call Today For a Free Consultation From an Experienced Georgia Bankruptcy Lawyer at Morgan & Morgan

There are many factors to consider when applying for Chapter 7 bankruptcy. The amount of your disposable income is just one of those factors. As this is a trying time for most people, make sure you ask questions and do your research. Hiring an attorney you are comfortable with will also help ensure your filing is as easy as possible, alleviating stress and letting you start anew. Moving forward, consider talking with someone regarding budgeting and credit management. These extra steps might help you stay on the right path for the future.

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