How Recessions Affect Bankruptcy

We have all seen the effects of an economic downturn.  There is a strange problem that can occur as a result of the “means test” that determines whether a person would qualify for a Chapter 7 Bankruptcy or a Chapter 13 bankruptcy.  Data which is compiled by the US Census is always behind a bit as it requires reporting of data.  If someone loses their job today, it is most likely to hit next year in the means test data.  So, if the average in Colorado is $45,000 per individual today (it’s not, but trying to make this easier to understand) and with people losing work, maybe it should be $40,000 — your case will be based on the $45,000 until the Census catches up.  Seems simple, what’s the big deal? 

If you are having to file a Chapter 13 Bankruptcy instead of a Chapter 7 Bankruptcy in Fort Collins, your legal costs will more than double, it is a lot more work and your relief is less.  It doesn’t affect those people who are making next to nothing, but those on the precipice are the ones who tend to get screwed.

If you are close to the median state salary and your expenses are high, but not BRUTAL, you may get hosed over due to this small differential.  Our job as bankruptcy attorneys in Fort Collins is to do what we can in terms of helping you disclose every legitimate debt and all earnings and make the best case we can for your financial well being.  There will be a few of you who we feel should be able to qualify for a Chapter 7 Bankruptcy due to real financial calamity, but we’ll have to do a Chapter 13 bankruptcy filing instead.

Given the changing laws and the importance of doing a bankruptcy filing correctly, we always recommend you go to an attorney.  Even if you choose to use someone else, which we don’t want, we still believe since bankruptcy law is challenging, you should avoid Do It Yourself bankruptcy  because making mistakes only put you in further jeopardy. 

If you would like a free Bankruptcy consultation to determine if you would qualify for Chapter 7 bankruptcy in Fort Collins, Chapter 13 bankruptcy in Fort Collins or neither, please give us a call!